Chapter 164 First Financing
In the bright and modern conference room of Tengda Group, a business negotiation of great significance to Song Ci is about to begin.
On the electronic display screen in the conference room, a striking welcome slogan was playing: "Warmly welcome XX leader to visit Tengda Group to guide our work!"
Song Ci, Zhang Yong, Wang Jing and several leaders from ICBC Capital, BOC Capital and Peking University Investment Fund had just visited the company, and gave everyone a detailed introduction to the development history, core business and achievements of Tengda Group.
The spacious and tidy office area, advanced electronic equipment, and energetic staff team of Tengda Group left a deep impression on several representatives of investment institutions. They nodded slightly from time to time, expressing their appreciation.
After the visit, which gave the representatives of the three institutions a basic understanding of the company, Song Ci invited everyone into the conference room to formally begin discussing the three institutions' strategic investment in Tengda Group.
"Mr. Song is really young and promising. I believe that under your leadership, Tengda's future will be even brighter. I am very optimistic about the prospects of this cooperation."
Mr. Li, the representative of ICBC Capital, laughed heartily and started praising Song Ci.
He had worked with Song Ci's uncle Liu Xiaochen before, and they had a good relationship. This time, it was the old colleague who was brokering the deal for ICBC to acquire a stake in Tengda.
This investment was a targeted issuance of shares by Tengda Group to three institutions, and the real market situation was well known to the several responsible persons present.
They are optimistic about the future development of Tenda, the largest Internet company in China, and want to get a piece of the pie after the company goes public.
The other party also took a fancy to the state-owned background of the three institutions, and may need to help "take responsibility" and resolve some problems that may arise in the future.
Song Ci quickly said modestly: "I am just a little clever, and I also caught up with the right time. The country strongly supports the Internet industry, which has given Tengda the opportunity for rapid development."
He is keeping a very low profile. The more arrogant he is now, the worse he will be beaten in the future. It is better for him to keep a low profile from beginning to end.
Besides, Tenda’s current small size is completely inadequate compared to giants such as ICBC, Bank of China, and Peking University.
"Mr. Song, you are too modest. Principal Zhou has always praised you, saying that you are one of the best students in Peking University in recent years. Today, I see that you are indeed a rare talent. I know that a great reputation is a real talent."
Mr. Jiang, the person in charge of Peking University Investment Fund, also praised them repeatedly in an effort to bring everyone closer together. Regardless of whether today's cooperation can be achieved, these ten young billionaires are worth making friends with.
After a few pleasantries, the representative of BOC Capital said with a smile: "Mr. Song, we are old acquaintances. Let's get started. Tell us in detail about your company's products."
Although BOC Capital does not have a special relationship with Song Ci like the other two, BOC has always been an important business partner of Tengda Group. It offers the most preferential interest rates for various corporate loans and personal loans to Song Ci, so it was able to get this opportunity this time.
Song Ci nodded and signaled Zhang Yong to turn on the projector and play the PPT that had been revised countless times, officially starting today's negotiations.
He cleared his throat and introduced loudly: "Tengda Technology Group was established in July 2004 and currently has more than 5,600 employees. It is a large-scale comprehensive emerging technology group company led by Internet portals and online games..."
Song Ci recounted the company's development history from its founding to the present day, and then went on to introduce its core business modules.
The heads of the three institutions also knew that the highlight was coming. No matter how good the previous words were, they were all empty talk. The core business was the top priority. They all sat upright, perked up, and stared at the PPT intently.
"The company is currently No. 1 in the domestic industry in multiple business sectors, including portals, email, game platforms, videos, online music, and instant voice. I can say without exaggeration that any Internet user in China must have used Tenda's products.
In addition, the company also has four wholly-owned subsidiaries, namely, Tengda Culture, Southern Cinema Line, Tiangong Special Effects and Yifutong Platform, which are also in the leading position in their respective fields. "
"Each of our businesses can become industry leaders. This is a testament to our excellent strategic vision and precise market grasp."
Speaking of this, Mr. Li from ICBC Capital couldn't help but sigh that his old colleague's nephew is truly a genius.
After a small interlude, Song Ci continued his report, explaining in detail the data and operating conditions of each business segment of the company. These are Tenda's most core data. Fortunately, everyone has signed a confidentiality agreement and there is no need to worry about confidentiality leaks.
Flipping through the pages of the PPT, the investors had a clearer and more intuitive understanding of the operating conditions of Tengda Group. They all felt that the trip was worthwhile and that it was worthy of being the largest Internet company in China. The actual situation was even better than what the outside world had predicted.
"Director Song, through your introduction just now, we have already understood the strength of your company. Tengda Group is indeed doing very well. Next, let's talk about valuation."
Mr. Li, the representative of ICBC Capital, spoke quickly and first.
The other two heads of investment institutions also set their sights on Song Ci. Investment is a consensus, but the most critical issue is how much Tengda Group will price him.
Song Ci looked calm, spoke clearly, and said calmly: "Tengda's pre-investment valuation is 9 billion US dollars!"
"How much? 9 billion US dollars! Mr. Song, you are asking for an exorbitant price!"
Song Ci's offer surprised Mr. Jiang of Peking University Investment Fund. He was not as wealthy as the two banks, and this valuation seemed outrageously high to him!
Mr. Li at the side also shook his head: "Mr. Song, your valuation is too exaggerated! A company that has just been established for three years can be valued at 9 billion US dollars, close to 70 billion yuan, it's all a bubble. The Internet bubble in the United States a few years ago led to the Nasdaq crisis. The profound lesson is still before our eyes."
The representative of BOC Capital also nodded and agreed, "Mr. Song, our bank manages assets for the people. We cannot explain to the higher-ups if you give us this kind of valuation."
Song Ci smiled at the protests of the three representatives, and said calmly, "Leaders, I didn't make a random offer of 9 billion US dollars. Everything must be based on data and facts.
Netizens say that Tencent, Baidu, Alibaba and Tenda are the four Internet giants in China, with Tenda being the first. Alibaba is not listed yet, but Baidu's market value is over 60 billion yuan, and Tencent is even more powerful, approaching the 100 billion mark. If Tenda goes public, will its market value be lower than the other two?"
Mr. Jiang of Beida hurriedly shouted, "Mr. Song, valuation and market value cannot be generalized. Stock prices rise and fall and are affected by external factors at any time."
"Please don't be anxious, Mr. Jiang. I will not use the stock prices of peer companies to estimate Tengda's valuation. I am just using Baidu and Penguin as examples to tell you that the $9 billion valuation is not just my own."
President Jiang calmed down a little and glanced at the two bank representatives beside him. Seeing that they were as steady as a rock, he felt that compared with the bank bosses, his energy-cultivation skills were still not up to par.
"Mr. Song, please continue. I was a little excited just now."
"In the final analysis, it all comes down to business data!" Song Ci turned to a new page on the PPT, which published the revenue of Tengda Group in the first half of 2007, and said with great confidence:
"Tengda expects that its annual revenue for 2007 will exceed 5.5 billion yuan, with a profit of 2.64 billion yuan. The PE value of general Internet companies fluctuates between 30 and 40. Based on a PE value of 30 times, the company's valuation should be 792 yuan, equivalent to 10.4 billion US dollars.
With great sincerity, I give you a 10% discount on the valuation. In addition to Tengda's own business, the company also owns 22% of JD.com and 30% of Donghai STO Express, and has also made arrangements in the e-commerce field. "
Song Ci's well-reasoned speech made the three investors opposite him frown. According to his calculation, the valuation of Tengda Group of 9 billion US dollars was indeed not too much.
Mr. Li of ICBC Capital and the representative of BOC Capital exchanged glances, and then the representative of BOC Capital argued: "Mr. Song, 30 times the P/E ratio is a bit high. The general P/E ratio of A shares is around 10 times, and the better companies can reach 15 times.
Even if Internet companies are high-tech companies, and everyone is optimistic about their future, 20 times is about right. If we use a 20 times P/E ratio, we can barely accept it. If we report it to the higher-ups, there is still hope that the project will be approved.”
BOC Capital took the lead, followed by ICBC Capital and Peking University Investment Fund, all of whom urged that it would be more appropriate to calculate Song Ci's price-to-earnings ratio at 20 times.
Even Wang Jing, who was attending the meeting as an observer, couldn't help but speak up to persuade the chairman to follow the three institutions' calculations. Based on a PE ratio of 20, Tengda Group is also a giant with a valuation of over 50 billion yuan. The 2% stake she holds is worth 1 billion yuan. But seeing that Zhang Yong remained unmoved, she refrained from speaking.
Song Ci shook his head and insisted on calculating it based on a price-to-earnings ratio of 30. He wanted to get the national team involved, but he would not overly reduce his own profits. He had already made significant concessions on valuation. The future of Tengda could not be measured by the immediate profits alone.
The two sides argued back and forth, both trying to make sense and refusing to give in, and the negotiations came to a temporary deadlock.
Song Ci sighed helplessly. These people who eat government food are really difficult to deal with. It seems that he can only show a few cards, otherwise he will not be able to convince those old foxes.
“My dear leaders, Tengda’s future is definitely worth more than tens of billions or even hundreds of billions of US dollars.
Since April 20, 1994, China has fully accessed the Internet and became the 77th member to become a fully functional Internet member.
Thirteen years have passed since then. Some names are in their prime, some have been submerged in the tide of the times, but the true curtain of the era has just begun.
From the day I founded the company, I firmly believed that Tengda would become a leader in the new era. Once it goes public in the future, a market value of 100 billion US dollars will be a given. Please listen to my layout and make the final decision. "
Song Ci's passionate and inspiring words aroused great interest among the crowd, and even Zhang Yong and Wang Jing standing by were attracted by his words.
"I'd like to hear more about it!"
"Tengda is positioned as a pan-entertainment media group based on new-era Internet technology, and one of the company's core strategies is the big entertainment strategy."
“What is big entertainment?”
The unusual beginning of Song Ci aroused everyone's strong curiosity.
"Have you ever wondered why Tenda, an Internet company, has set up subsidiaries such as film and television and cinema chains?
I can tell you that this is part of big entertainment.
Tenda is the company with the largest reserves of film, television, animation, and game copyrights in China. From the upstream content IP reserves to the midstream development and production, the company can quickly develop games and films, and even form film and game interactions.
The last link is to use the traffic of Internet products such as Toutiao.com for downstream platforms and publicity. Television, movies, games, music, and all-round communication and coverage in the entertainment field.
Form diversified development and linkage, maximize the utilization rate of any project, and build an ecological industrial chain. Moreover, Tengda has initially realized an ecological closed loop! "
"Excellent!" Mr. Li of ICBC Capital applauded and praised: "You have great ambitions. Mr. Song, your general explanation has opened my eyes. I didn't expect your layout to be so far-reaching!"
"In addition, Tenda also has cutting-edge big data technology that leads the global Internet industry." The PPT was flipped, and Song Ci went on to introduce Tenda's trump card, the big data technology that has already begun to show results.
After the introduction, seeing that the representatives were somewhat relaxed and no longer as insistent as before, Song Ci added fuel to the fire:
"Bosses, I know you will have to report to the organization when you return. How about this? Let's sign a bet agreement on the valuation of the next round of financing of Tengda Group. If the valuation of the next round is lower than 18 billion US dollars, I will compensate you with shares."
Mr. Li thought about it and agreed that gambling is also a common method in the capital market. He nodded and said, "I agree with your proposal in principle, but there must be a time limit for the next round of financing of Tengda Group. It cannot be delayed for seven or eight years. Otherwise, such a gambling is meaningless."
The CEO of BOC Capital interjected: "There is also a need to establish a charter for the compensation law and make it clear."
"The next round of financing will be completed within three years. If the financing valuation of Tengda Group does not reach 18 billion US dollars, then today's investment will be 50 billion yuan, and I will personally compensate you for any gap."
"If the valuation of US$18 billion is not achieved in three years, the losses of the CEOs will be compensated by the entire Tengda Group management."
Zhang Yong, who had been silent all this time, suddenly spoke up, demonstrating his responsibility to stand by his leader. He is also a shareholder of the company and one of the leaders of Tengda. As the chairman, he is always at the forefront in fighting for the interests of the company, so naturally he will not stay out of it.
The meeting room suddenly became quiet, and several representatives began to silently calculate and weigh the pros and cons.
If the valuation can double within three years, that means the annual return on investment is about 25%, which is much higher than the general investment income. If it does not reach the difference of Song Ci compensation, it feels like a sure win no matter how you calculate it.
The three parties looked at each other, exchanged a few words in a low voice, and finally nodded, seeming to have reached an agreement.
"Mr. Song, the proposal you put forward is very sincere. BOC Capital, Peking University Investment Fund and I agree in principle. We will send investigators to investigate later. As long as your company's operating data is correct and the profits are real, we will invest in your company at a valuation of US$9 billion."
At this point, the matter was settled. Song Ci said happily, "Great! Thank you all for your interest in Tengda. I will arrange for someone to prepare the materials. We welcome the audit investigations of the three companies at any time."
(End of this chapter)
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