Although the millet official has been flashing its word, this highly visible IPO seems to have been nailed.
The China Securities Regulatory Commission and the Hong Kong Stock Exchange also took turns to occupy the media financial section because of Xiaomi’s listed rumors; various Cayman funds and wealth management agencies rushed to sell the company Pre- In the old equity of IPO, in their fundraising PPT, Xiaomi’s valuation also surged from US$45 billion to US$100 billion, or even US$200 billion. Each time the valuation increases, it means new opportunities for making money.
1
Xiaomi IPO is coming
The Cayman Islands, where the straight distance to Hong Kong is over 12,000 kilometers, is gradually boiling.
Over the past few decades, loose taxation and regulatory policies have allowed it to be shaped as a private paradise with the Bermuda Islands, British Virgin Islands and other 'cousins'. In the Cayman Islands, as long as the promise is not local To open operations to Cayman residents, there is no need to pay any taxes to the local government. This exempted partnership (Exempted Limited Partnership) is very popular with closed-end funds and equity investment funds.
A considerable portion of Cayman’s private equity funds will sell high-net-worth individuals to companies with high net worth—12,000 kilometers away. These companies, known as the dotcom stocks (the TMT industry), are creating new sources of wealth. .
'We made a fund for the Xiaomi Pre-IPO, a quota of US$10 million, and it was raised in two days.' Chen Sicheng said. Before that, he participated in the establishment and collection of several Pre-IPO funds, including The good doctors who announced the completion of the Pre-IPO fundraising, as well as ZhongAn Online, which was previously listed on the Hong Kong Stock Exchange, have never been as exciting as Xiaomi.
Although the millet official kept a lid on the company’s listing, it had never had any substantive documents to confirm its listing. However, this highly visible IPO seems to have been nailed down. As a result, some of Lei Jun’s actions are not inevitably taken. Associated with Xiaomi’s listing. For example, on the 13th of this month, when Cheetah Mobile announced that Lei Jun had resigned as the chairman of the board of directors, this personnel change was immediately interpreted by the media as a preparation for the listing of Xiaomi. Earlier, the millet bracelet manufacturer - China Meter Technology's listing on the New York Stock Exchange was also considered outside the market for Xiaomi's overall market.
Lei Jun himself remained silent about the IPO rumour. In March 2016, he had very confidently stated that Xiaomi would not be listed within 5 years; in the same year, he extended this time point to 2025 in an event. But with the Xiaomi went out of the 'midlife crises' and Lei Jun’s rhetoric on listing also changed. In November last year, Lei Jun did not emphasize the time limit when it came to listing, but used a more vague expression — 'It would be more comfortable in business. When the IPO. '
Almost at the same time, Chen Sicheng heard the exact news that Xiaomi was preparing for listing. The selling materials of sporadic Xiaomi Pre-IPO's old shares also began to spread in the WeChat group with the theme of asset allocation or overseas investment. Buying home, high-end insurance and applying for a flying driver's license are also hot topics in these WeChat groups, but nothing compares to taking a slice of the crowded IPO.
No one knows where these shares come from. Old shareholders will be eager to withdraw due to the expiration of their funds, or they will be able to sell their shares for a variety of other reasons. In general, investment bank circles and Internet venture capitalists hold top level. The resources, they will choose to share the shares of the old shareholders to give Chen Sicheng informed people.
"There is a good thing." Chen Sicheng said. He got a share of Xiaomi from the investment bank's friends. These shares will be quickly packaged into Xiaomi Pre-IPO's Cayman Fund, and they will sell to high-net-worth individuals who are very enthusiastic about investing. For example, successful businessmen, bankers or people who are rich in Irish real estate, the fund will extract revenue share and commission from it.
For people like Chen Sicheng, every star company landing in Hong Kong stocks means a chance to make money. Last year, he raised millions of dollars for Zhong An Online’s Pre-IPO fund with a threshold of US$100,000. The IPO and then the wave of listings of Tencent-based companies have made his clients profitable.
When designing the Xiaomi Pre-IPO Fund, Chen Sicheng set the investment amount at US$1 million. Due to the lack of financial statements, they could not price the millet according to a fair valuation method. This fund was eventually estimated to be US$60 billion. Value-based pricing began to be raised outside. At that time, most of the fund's valuation for Xiaomi was between US$50 billion and US$60 billion. These funds were forecasted in roadshow materials and the value of Xiaomi's IPO is expected to reach 90 billion to 1100 yuan. One hundred million U.S. dollars.
'Generally I would consider the customer for 12 hours, but Xiaomi let them think about 4 hours, 4 hours don't give me a reply, I'll change someone else, some people want to buy it. 'Chen Sicheng said. His acceptance of Xiaomi. The degree of welcome has been psychologically prepared, but this time he apparently underestimated the fund's rate of fundraising. A total of $10 million was sold out in two days.
'We have previously done a private equity fund for the head company of the drone industry. The $23 million quota has not been raised for more than three months. If channel resources are asymmetric, good projects will have to be raised for a long time. Speed. 'He said.
According to unwritten conventions in the industry, Pre-IPO promotion materials can only be sent to customers who confirm the investment intentions, but the emergence of Xiaomi has changed these consensus. The salespersons in the roadshow are shaking and the sales staff are in the WeChat group. Various versions of promotional materials were circulated, and it was extremely possible to package millet into a ten-year investment opportunity. Even at Baidu Post Bar, people began to peddle the share of Xiaomi.
Chen Sicheng belongs to the earlier person who participated in Xiaomi Pre-IPO share investment. He had already completed the fundraising a few months ago. Today, the PPT selling Xiaomi’s share in the market is still flying.
Lin Feifan, a partner of a VC fund, also received a referral material for the Xiaomi Pre-IPO investment. This material also seems convincing: it was initiated by an Internet finance company focused on overseas asset allocation, and the fund manager had A well-known foreign VC is at the helm. It is said that they are selling shares of Xiaomi Overseas's underlying investment fund.
In mid-March, in a WeChat group, Li Jing shared a special funds PPT for Xiaomi, which also introduced the quota of Xiaomi Pre-IPO's old shares that were scarce in the market, and started the investment of US$1 million. The 'opening window is only one week'.
When Chen Sicheng once again began to pay attention to Xiaomi's news, he heard that the company's valuation has become 200 billion US dollars.
2
200 billion madness
According to some media sources, Lei Jun contacted the investment bank in November last year and set an expected market value of US$200 billion for the company. This figure was recognized by the investment bank.
Tencent’s market value at the beginning of last year was also more than US$200 billion. In this comparison, Xiaomi would not be worth US$200 billion in any case. If the agency forecasts a net profit of US$1 billion last year, the 200-fold P/E is somewhat exaggerated. A large brokerage analyst said.
According to public information, in December 2014, Xiaomi completed the last round of private equity financing to date, amounting to US$1.1 billion. At that time, its valuation reached US$45 billion. But in the following two years, Xiaomi entered a trough. Follow this According to analysts, even if the situation was opened up through overseas market expansion and the Xiaomi ecological chain last year, it is still difficult to support a valuation of up to US$200 billion.
'Mille can certainly grow to a 200 billion company, but it is still not up to now.' The analyst said, 'If capital really pushes millet to 200 billion, it might be more of a worry that the economy is not a problem.'
The estimated market value of US$200 billion is also far away from the statistics of some institutions. In the global unicorn list released by CB Insights last September, Xiaomi ranked third with a valuation of US$46 billion. And it was released at the Hurun Research Institute. In the "2017 Hurun Greater China Unicorn Index", Xiaomi's valuation is only 30.7 billion US dollars.
In the absence of clear financial information, most private equity funds will value the company based on the way the company has traded in the past, such as in the past, taking into account how much of the old stock transfer will give some discount to the value. Chen Sicheng believes that Xiaomi is between 500 billion and 600 yuan. The billion dollar valuation is a reasonable price.
However, when news of the 200 billion U.S. dollars expected market value spread rapidly, the valuation of Xiaomi in Pre-IPO fund promotion materials has become 70 billion, 80 billion U.S. dollars, and even higher 130 billion U.S. dollars.
'I have seen the most outrageous, expected market value has blown to 240 billion US dollars. 'Chen Sicheng said. He has so far received more than 20 millet Pre-IPO financing promotion materials, but he said that only three can really trade. He did not have those The law trading fund is called 'fake', and this method is not uncommon in Hong Kong. There is always a foundation that can not get the goods to start fundraising first, and then hold chips to talk about shares with the investment bank.
'Some other foundations bought the entire fund's share directly, and then went to the customer's order.' Chen Sicheng said.
It seems that everyone thinks that this is an investment that is stable and profitable, even if the subject of Xiaomi’s public listing has not yet reached a clear conclusion. In addition to Xiaomi Technology, Xiaomi’s subsidiary also includes Xiaomi News, Xiaomi Payment and Xiaomi in Hong Kong. There are at least 8 companies such as HK Limited. At the same time, Xiaomi has never disclosed a specific company structure, but most of them believe that Lei Jun’s overall shareholding in Xiaomi should be more than 50%.
"Lei Jun is a person who is very familiar with the operation of capital. His control over the company's equity should be very stringent." Chen Sicheng said. This makes him more convinced that in addition to enthusiastic investors, there are enthusiasm for the investors, as well as the media. , some inexperienced participants.
Fund managers are obviously happy to see Xiaomi's valuation rising under the influence of the media. They are also making every effort to package Xiaomi Pre-IPO's share into a tight and profitable investment target that cannot be met. According to Chen Sicheng, In addition to selling fakes and secondary sales, some traders will enter the court in a way that the 'SFC doesn't like,' and he even sees an imaginative way of auctioning.
'The primary market need not do equity and financial disclosure. For similar Pre-IPO equity funds, the value of the issuing company's credit, the reputation of the fund's partners in the industry will be a factor for investors' balance, in addition to the value of the target company itself. 'The analyst said, but he also said that for companies like Xiaomi, 'some confusion can understand.'
Under normal circumstances, the fund rake will be set at the level of 2% to 5% of the company's quality, but Xiaomi's Pre-IPO equity fund will generally charge 8% to 10%. Chen Sicheng has also seen the highest 15% of the commission rate.
In addition to the divergent valuations, Xiaomi's IPO still has its own uncertainties, especially when it returns to the A-shares. However, once the IPO fails, these Pre-IPO funds will face difficulties to withdraw, even if other institutions have taken over, Investors also have a high probability of losing money. However, it is clear that these potential risks have not prevented the high enthusiasm of funds and investors.
Even if it was not out of stock, I got the client's information and made a profit. I later promoted other goods to him. 'Chen Sicheng said. According to him, in some wealth management agencies, the price of a high-net-worth customer's contact is 1600 yuan. Up and down, 'I sold my address book and I was able to make a suite in a small city.'
3
A stock conjecture
The news that the A-shares will open up a green channel for the return of the unicorn has added more possibilities to Xiaomi’s listing. According to the China Securities Regulatory Commission, currently there are about 100 US$1 billion in domestic unicorn enterprises, 20 There are no more than 50 million U.S. dollars, and the next step is to promote the A shares listed in batches. They said that they have established an expert committee on the innovative economy of the four new types of enterprises, and started to conduct research and conduct checks.
Before the strategic emerging board was set aside, domestic VC/PE institutions had invested in a number of projects that wanted to be on the strategic growth board, but eventually collapsed.
'At present, the CSRC only says that in research, there are actually many rules and regulations to adjust. For example, the 23-fold price-earnings ratio of the tradition, millet may be more than 23 times in the private equity phase, and the same rights are different thresholds. ' Source Star Capital The management partner Yu Lifeng said that A shares have no precedent for the direct listing of the VIE structure, and the temporary splitting of the business unit is not in line with the direction of sound financial guidance. However, with Foxconn, Xiaomi’s listing on the A share is not impossible. 'I think it's very possible. Take Xiaomi as a typical example, for reference to the company behind.'
Different shares of the same stock have been hailed as the biggest changes made by the Hong Kong Stock Exchange over the past 30 years. In the consultation paper issued on February 23rd, the Hong Kong Stock Exchange drafted three major elements of the “Listing Rules” amendment, including allowing 'not yet passed'. "The listing of biotechnology issuers' and 'different voting rights structure companies' on the main board's financial eligibility test, and 'new convenience secondary listing channels' to accept Greater China and overseas companies to come to Hong Kong for a second listing'.
Some media reports said that the Hong Kong Stock Exchange wanted Xiaomi to be the first key company to introduce the VIE structure and let the largest listed technology company since Alibaba was listed in 2014 (with a valuation of US$231.4 billion) settled in Hong Kong. The Hong Kong Stock Exchange hopes that Xiaomi can submit the application form immediately after the new case comes into effect at the end of April, as soon as possible to become the first-round listed company with different shares. However, these have not been officially confirmed.
According to a person close to Xiaomi’s insider, Xiaomi has not yet confirmed the final listing location. Compared to the United States, Hong Kong’s capital markets are more highly sought after by the first-tier Chinese tech stocks IPO. The Internet company with the highest stock market value, A-shares and unicorns are full of expectation of return. The final valuation is also uncertain. He stated that Xiaomi’s valuation of repurchase options is US$97 billion, but the company also estimates itself. The value also has a lot of arguments.
'Mizu's (IPO) is a time-intensive task that is far inferior to the development of long-term Ant Financial Services, Micro Public Bank, Xiaopeng Automobile, etc. It is a company with a domestic equity structure. If it is a CDR, draw lessons from ADR rules and experience and China’s monetary policy, It should be similar to the Shanghai-Hong Kong Stock Connect or Shenzhen-Hong Kong Stock Connect rule. 'Yang Yicheng, who once worked for a Hong Kong-based stock brokerage, analyzed that he would indicate to all-weather technology that the recent Hai Chen Pharmaceuticals may have some enlightening significance. The company carries three types of shareholders and nested products (the asset management plan nested corporate-type private equity funds) landed on the A-share market, and has a TMT industry unicorn with a large number of three types of shareholders (an asset management plan, a contractual private placement, and a trust plan). The shareholders have greater reference.
Considering the speed of adjustment by the China Securities Regulatory Commission over the years, most of the funds that peddled Xiaomi’s old shares did not believe that Xiaomi could land A shares within the year. According to another fund that is selling Xiaomi’s share, an important shareholder once shared with Xiaomi. After signing related agreements, once Xiaomi fails to be listed at the end of this year, they can transfer the equity in the hands.
For Xiaomi, which intends to seek listing during the year, if the temporary adjustment of the listing plan, it will face the risk of time will grow and affect the company's strategy.
'Using any kind of operation to A shares, there are policy risks and high time costs. There are still a bunch of domestic unicorns, but Xiaomi will soon be listed. 'Chen Sicheng full of confidence.
4
Inferior to Central
On January 24 of this year, the Hang Seng Index reached an intraday high of 33018.71 points, breaking the 33,000 point for the first time in the history of the Hong Kong stocks for a century. After missing Alibaba, Hong Kong stocks have been trying to take off the hat of the 'lowest global valuation market'. From last year At the beginning, Li Xiaojia, chief executive of Hong Kong Stock Exchange, said in a row that 2018 will be the turning point and start-up year for the capital market in Hong Kong.
Zhong An Online, the record of frozen assets created by Yi Xin and later Wenwen Group is changing investor perceptions of Hong Kong stocks and creating new wealth opportunities.
'Shenzhen gang finance and media, no one rely on advertising to eat. 'Chen Sicheng said. He said that thanks to the relatively relaxed regulatory environment in Hong Kong's capital market, some media will engage in similar equity transactions, and use the right to speak up the company's high Valuation, profit from.
In addition to the promotion materials of Xiaomi Pre-IPO, Chen Sicheng received QQ music and promotion materials for today's headlines. In order to quickly raise funds through the brand effect of star companies, some promotional materials began to openly falsify.
'All the information is false, including financial data, listing expectations, and even capital stocks are all false. I have seen this for the first time due to the due diligence fraud. 'Chen Sicheng said, 'Everybody is essentially a second trader. Layers of information to make money, but could not resist someone to undermine market rules, want to earn a coffin, no more than those who play ICO advanced. 'Chen Sicheng said.
Chen Sicheng himself can use some social relations to verify the authenticity of information with related parties, but the vast majority of investors are unable to distinguish between true and false.
In fact, the recent external valuation of Xiaomi Pre-IPO seems to have signs of a correction. The value of the material Lin Feifan received a few days ago is a valuation of 70 billion -800 billion US dollars; Li Jing shared millet special fund PPT according to 790 Billion US dollar valuation; Recently, the media also received promotional materials showing a valuation of 68 billion US dollars.
'Analysis should be prudent, but investment must be greedy.' Chen Sicheng said. As long as everything goes well, Xiaomi's fund will probably make Chen Sicheng earn 500,000 yuan, and fund partners can earn almost 1 million yuan.
From Futian's office in Shenzhen to Hong Kong, Chen Sicheng is not quite sure how many rich people have gathered in this world's most densely populated 40 km area. For them, the $1 million starting investment amount is an insignificant threshold to get the ship. Tickets are the most important thing.
'The rich people are also very painful, very anxious. Their money is a loss as long as they don’t invest in it, so we have to keep investing and keep adding value. 'Chen Sicheng said, 'Of course, the happiness of the rich is also ours forever. Unexpected. '
Author Li Motian