Picture source @Visual China
Text | Chinese businessman Tao Lue
At the critical moment when the deadline for the "10 billion bet" is approaching, Wang Jianlin finally waited for his "key man".
On December 12, Wanda Group officially released information stating that PAG Investment Group (PAG) and Dalian Wanda Commercial Management Group jointly announced the signing of a new investment agreement: PAG will join other investors when its investment redemption period expires in 2021. , after being redeemed by Dalian Wanda Commercial Management Group, it reinvested in Zhuhai Wanda Commercial Management.
The biggest highlight of this cooperation is that the risks of Zhuhai Wanda Commercial Management's listing and related gambling agreements, which Wanda Group had previously faced with huge uncertainty, have been officially lifted.
According to Wanda’s previous gambling agreement with investors, if Zhuhai Wanda Commercial Management cannot be successfully listed before the end of this year, Wanda Group will have to pay a total of more than 40 billion yuan in principal and interest to investors. The new agreement signed by PAG and Wanda , no more bets were set on the listing issue of Zhuhai Wanda Commercial Management.
That is to say, even if Zhuhai Wanda Commercial Management cannot be listed for a long time in the future, Wanda will no longer have to bear huge redemption pressure and can concentrate on business development.
In the current environment that is still full of uncertainty, why and why does Taimeng single-handedly change the direction of the tide? Who is Shan Weijian, the key man in charge of Taimeng?
Immediately
In February of this year, Wang Jianlin, who had not appeared in public for a long time, appeared at the White Horse Temple in Luoyang. Over the past few years, he has had a bad time and his body has lost a lot of weight. He is even thinner and even looks haggard.
This "bet" put Wang Jianlin under too much pressure.
In 2021, Wanda went all-out and withdrew its A-share listing application. Zhuhai Wanda Commercial Management, the main body of the reorganization, began to compete in Hong Kong stocks and launched Pre-IPO financing.
According to the prospectus, Zhuhai Wanda Commercial Management’s institutional investors at the time included 22 companies including the Zheng Yutong family, Country Garden, CITIC Capital, Ant Technology, Tencent, PAG Investment Group, and Warburg Pincus.
These investors invested approximately 38 billion yuan in Zhuhai Wanda Commercial Management in August 2021, of which PAG invested approximately US$2.8 billion (approximately 18 billion yuan), which was before the listing of Zhuhai Wanda Commercial Management. largest outside investor.
In the above-mentioned investor agreement, there is not only a three-year profit guarantee for Wanda Commercial Management, but also a gambling agreement on the listing period: If Zhuhai Wanda Commercial Management fails to complete the listing before the end of 2023, Wanda Commercial Management has obligations Repurchase all or part of the shares from the above investors at an annual internal rate of return of 8%.
This means that if fails to be listed on Wanda Commercial Management before the end of this year, Wanda will need to pay more than 40 billion yuan to investor .
At that time, Wang Jianlin, who signed the "sky-high price bet", must have never thought that Zhuhai Wanda Commercial Management's road to listing would be so troubled, nor would he have imagined that the subsequent economic and financial market development would be so volatile.
Zhuhai Wanda Commercial Management's performance in the past few years has been quite impressive: From 2020 to 2022, its revenue was 17.196 billion yuan, 23.481 billion yuan, and 27.120 billion yuan respectively, with corresponding increases of 27.97%, 36.55%, and 15.50% respectively. , the corresponding net profits were 1.112 billion yuan, 3.512 billion yuan and 7.534 billion yuan.
But on the road to listing, Wanda was extremely unlucky. In the past three years, Zhuhai Wanda Commercial Management has submitted a prospectus to the Hong Kong Stock Exchange four times, the most recent of which was on June 28 this year. The first three failures were due to the fact that the H-share issuance approval issued by the China Securities Regulatory Commission was not obtained.
According to the regulations of the Hong Kong Stock Exchange, the prospectus submitted by the company to be listed is valid for 6 months, which means that the latest prospectus submitted by Zhuhai Wanda Commercial Management will also expire soon. Wanda will be listed on the Hong Kong stock market within the agreed time of "bet" It is already impossible.
What makes Wang Jianlin even more worried is that the entire market environment in the past few years, including the stock price performance of listed property management companies, the market's expectations for this type of business, and the resulting impact on Wanda's financial capital operations, is also a lot of bad news. More than good news.
In order to have enough capital to survive the winter and survive the crisis, Wang Jianlin has continued to lose weight this year, reducing his holdings of assets and realizing them. First, he intensively reduced his holdings in Wanda Film, and also sold some of his Wanda Plaza, financial licenses, Infront Sports and other assets. on the shelves in exchange for working capital.
However, these funds obtained are obviously not enough to cope with the performance pressure of the expiration of the huge "gamble". Wang Jianlin and Wanda can still be said to be imminent.
Turning crisis into opportunity
To many people's surprise, the "white horse knight" will save Wanda from fire and water at the critical moment, only half a month before the bet is fulfilled.
Although judging from the agreement, this emergency rescue is conditional - according to the new agreement, Wanda's shareholding ratio in Zhuhai Wanda Commercial Management will be reduced from over 78% to 40%, and several existing and new companies such as PAG will Additional investors and shareholders participated in the investment, and the total shareholding increased to 60%.
But for Wang Jianlin, the biggest victory is to be able to successfully pass the test and ensure Wanda's smooth passing and sustainable development.
is willing to reduce its shareholding to 40%, which once again shows Wang Jianlin's courage and structure, especially his "willingness" to preserve the healthy development of Wanda, the work he has devoted most of his life to.
According to media reports, as early as half a month ago, Wanda began to discuss plans to postpone the listing with various investors.
At that time, Wanda proposed to investors a plan to pay 30 billion yuan in equity repurchase funds and corresponding interest in installments within four years.
The condition is that Wanda will provide investors with another 20% of Zhuhai Wanda Commercial Management's equity as collateral.
Judging from this agreement, Wang Jianlin finally gave up more, and in exchange -
completely relieved Wanda of the worries that it might face risks again due to its listing, as well as more support from other shareholders, thus giving Wanda a more leisurely life. development environment, and truly develop from a long-term perspective.
As the announcement stated -
"Wanda will work with important shareholders such as PAG to further optimize the company's legal person governance, maintain the stability of the management team, and jointly support the company's long-term development."
This also means that Wang Jianlin has once again successfully transformed Crisis is an opportunity, and Wanda will therefore be reborn and renewed on a stronger development base and higher development dimension.
Destiny Bundle
Compared with Wanda's success in "breaking through" in this way, what surprised many people even more was that the "white knight" who came to its rescue was PAG Investment.
But judging from PAG’s business territory, especially its capital strength, this is also reasonable.
According to its official news, PAG is one of the largest independent alternative investment management groups in Asia and the only alternative investment company headquartered in the Asia-Pacific region.
Different from traditional asset management, alternative asset management has strong asset management scale and cash flow, strong entry barriers, and higher rates. The Blackstone Group, which is familiar to investors, is a leader among global alternative asset management companies, while PAG Investments is also known as "Asia's Little Blackstone" by the investment community.
At present, PAG's assets are as high as US$50 billion. Under the leadership of Shan Weijian, PAG's investment direction mainly follows the joint development route of the three major sectors of credit and market, private equity and real estate.
In the past 10 years, PAG Investment has been active in the Chinese market, with a particular preference for real estate, and has achieved good results in the real estate industry second only to the total return rate of private equity investment. Its benchmark projects include:
In 2013, PAG Investment Group acquired 65% stake in Shanghai Yueda 889 Plaza project;
In 2015, Vanke teamed up with PAG and Tishman Speyer to acquire Shanghai Enterprise World Phase 3 under Shui On Real Estate for approximately RMB 3.57 billion, and raised an equivalent of RMB 509 million from the market. US dollar loan;
In November 2017, PAG Investment Group also jointly established a real estate fund Super Alliance Real Estate L.P. in the Cayman Islands with China Merchants Shekou at a capital investment ratio of 4:1, with a total scale of 1.6 billion yuan.
Subsequently, the real estate fund quickly acquired 100% of the equity of Shanghai China Merchants Tower held by China Merchants Shekou, 100% of Shanghai China Merchants Plaza, and 91% of Beijing China Merchants Tower located in the core business area of Beijing in the form of overseas agreement transfer. equity, with a total transaction consideration of approximately RMB 5 billion. Shan Weijian, the head of
PAG Investment, once explained his investment strategy and style in an interview. One of the key tactics is Buy-out (control acquisition), which is to obtain absolute control of the target, reorganize the company's management, and ultimately improve the business. Add value and then sell for a profit.
"The targets of M&A investment are usually enterprises with considerable history. They may not be operating well at this stage, or there may be room for improvement. We mainly create value by improving the operation of the enterprise after acquiring control." Shan Wei Jian said.
’s most recent transaction was that PAG Investment spent up to 8.35 billion yuan to acquire the equity of Qixiang Group, a subsidiary of Cedar Industrial, and gained control of the company.
PAG’s investment in Wanda, especially its acquisition of a total of 60% of the shares, obviously has a similar tone.
Shan Weijian once said that venture capital invests in the ability of management, and I am afraid it will be worthless if the management is changed. "M&A investments are completely different. The main way we create value is to improve its operations, strategies, and growth prospects. We have a post-investment management team, and they often function like a management consulting firm, helping Management is responsible for formulating strategies, improving financial management, etc."
Shan Weijian said in an interview, "After we make a merger, we usually make sure that the management is the best management and the CEO is the best candidate. We found this The team will give him strong equity incentives and completely tie his interests with our interests. If he makes money, we will make money, and if we make money, he will make money."
This also means that Shan Weijian may lead PAG is deeply involved in the development of Zhuhai Wanda Commercial Management and brings new development possibilities to Wanda.
Moreover, Taimeng and Wanda are also old acquaintances.
More than ten years ago, among the first batch of investors in Dalian Wanda, there was Tai Meng.
According to media reports, in 2009, CICC took the lead in Wanda’s launch of the war. The leading investor was China Construction Bank International. Among other investors, there was a company called Beijing Dazhong Taiping, which was PAG’s RMB fund. An investment company jointly established by management platform Taihailian and Zhang Dazhong, the founder of Dazhong Electrical Appliances.
Shan Weijian and Wang Jianlin also have a close friendship. They also have a common friend-Jack Ma.
PAG's total investment of US$2.8 billion in Zhuhai Wanda is almost the largest foreign private equity investment in a Chinese company in recent years. This also shows his confidence in Wanda and the future of China's business management market.
Shan Weijian once said in the prelude to "Money Game", "As long as there is no withdrawal of investment in , the story will not be over, and the outcome will be uncertain. For investors, , no matter how large, how complex, or how attractive it is, The most eye-catching transactions and transactions are only the starting point of the journey. Only when you completely withdraw can you know the success or failure of the investment."
's investment in Wanda this time can also be said to be Shan Weijian's fate that brings him and Wang Jianlin closer together. are bound together.
Mr. Key
As the "Mr. Key" in the incident, Shan Weijian's background is also full of legend.
Shan Weijian was born in Beijing in 1953. Just three years after graduating from primary school, he boarded a green train full of educated youths, traveled far away from his hometown, and was sent to the Gobi Desert in Inner Mongolia to reclaim wasteland.
In the desolate Gobi Desert, the lowest temperature is often below minus 10 degrees. Shan Weijian cultivates wheat and builds canals during the day, and studies under a weak kerosene lamp with his hands curled up late at night in the cold winter.
Fortunately, before coming to the Gobi, Shan Weijian successfully assembled a semiconductor radio with the help of friends. With this radio, he could obtain a wide range of information, including international news, and even taught himself English.
After six years of this kind of life, Shan Weijian finally got the opportunity he had been waiting for to get out of the Gobi: he obtained the qualification of a worker, peasant, and soldier college student and obtained an admission place at the Beijing Institute of International Trade (now the University of International Business and Economics).
In 1979, he became the first batch of international students to go to the United States after the founding of the People's Republic of China. He received an MBA from the University of San Francisco, a master's degree and a doctorate from the University of California, Berkeley.
After graduating with his Ph.D., Shan Weijian worked as an assistant professor at the Wharton School of the University of Pennsylvania for six years, then moved from the academic path to the market, and became the managing director of JPMorgan Chase in 1993.
html Five years later, Shan Weijian joined Newbridge Investment, a subsidiary of TPG (Texas Pacific) Investment Group, the world's leading alternative asset management company, and began his "cheating life" in the investment world.In 1999, when the East Asian financial crisis was raging, South Korea's First Bank was in trouble. The value of the entire bank fell to less than 900 million U.S. dollars, and its losses were as high as 1 billion U.S. dollars. Shan Weijian received an offer from his "boss" Poundman in Shinqiao. A fax, "Life experience tells us that if the structure and conditions are reasonable, acquiring a bank is the best time during an economic crisis."
This gave Shan Weijian confidence - since then, he represented TPG subsidiary Xinqiao It invested and negotiated with the South Korean government. After 15 months of negotiation, Newbridge acquired 51% of the bank's equity for US$500 million.
Shan Weijian also started the "Buy-out" practice from that time on. After
took over Hanil Bank, Xinqiao completely transformed it: first, establishing a strict risk control system. Shan Weijian analyzed that the reason for its collapse was that it failed to control risks and had too many non-performing assets; secondly, it changed its strategy from focusing on public business to focusing on private business to create new value growth points.
Within one year, Hanil Bank turned a profit, doubled its total assets, and successfully transformed into a retail bank.
After that, Xinqiao transferred its equity to Standard Chartered Bank and finally received a 5-fold return. Shan Weijian's record in reorganizing Korea's First Bank was even included in Harvard's textbooks.
In 2004, after returning to mainland China, Shan Weijian tried to copy Hanil Bank's investment ideas. However, at that time, China's banking industry was undergoing rapid changes and foreign capital was not welcome to join. But he still found opportunities and completed a classic project: leading Newbridge Investment to acquire 17.89% of Shenzhen Development Bank for 1.235 billion yuan, becoming the first foreign investment to acquire and control a listed commercial bank in China. After
became the controlling shareholder, Xinqiao immediately reorganized and controlled the board of directors of Shenzhen Development Bank and completed a series of process changes and personnel changes. Under its reshaping, Shenzhen Development Bank's non-performing loan ratio increased from 11.41% at the end of 2004 to 0.63% in the first quarter of 2010, its net profit increased from 300 million yuan to 6.3 billion yuan, and its asset size tripled.
After that, Xinqiao transferred its equity to Ping An Bank and obtained more than 12 times the income.
Shan Weijian, who once planted corn in the Gobi, also gained the transformation into the "King of Chinese PE".
Shan Weijian once said in his autobiography "Out of the Gobi", "I am prepared at all times. If fate is unlucky and does not give me a chance, I will have no regrets. But if the opportunity comes, I am not prepared. OK, that's my fault. So I will never give up."
In 2010, Shan Weijian, who thought he was ready, took another brave move: he chose to leave TPG.20 days after
resigned, he and TPG jointly announced that the two parties would form an investment alliance, which is now PAG. Shan Weijian would join with a considerable investment fund, serve as chairman and CEO, and take the lead in establishing an investment alliance focusing on the entire Asia. The target market M&A investment fund focuses on investments of all sizes in the Asian M&A market.
Under the leadership of Shan Weijian, PAG has integrated the three core strategic departments (i.e., credit and markets, private equity and real estate) into a unified operating platform, and launched a new journey with China as the core, from Tencent Music to Yingde Gas, from Universal Studios Japan to Lotte Catering Group, from Zhenai.com to Lexin, and even Nayuki’s tea, have since become PAG’s “works”.
However, Shan Weijian, whose investment style seems to be "domineering", is extremely low-key.
Compared with other big guys who are active in front of the stage and willing to preach, Shan Weijian is more willing to spend his time writing columns and paying close attention to changes in the global economy. He also opens his own WeChat subscription account and publishes relevant articles from time to time. .
In interviews and reports, he always avoids answering personal questions.
What is particularly worth emphasizing is that Shan Weijian and Wang Jianlin are the same age. Before this cooperation, the two people in their seventies were also struggling for the same return home:
In March 2022, PAG Investment also Submitted a form to the Hong Kong Stock Exchange, planning to raise US$2 billion, with a valuation of US$20 billion, and sprinting for an IPO. However, because the overall market is not optimistic, PAG has shelved the IPO plan and has not made any new moves at present.
It can be seen that Wanda, as one of its largest investment projects, has long been related to the fate of PAG. Under such intertwining, Shan Weijian saved not only Wang Jianlin, but also himself.
Reference materials:
- [1] "At the helm of 300 billion, "King of Private Equity" Shan Weijian: China is still the place with the most investment opportunities", Zhenghe Island
- [2] "Shan Weijian: Investment without exit will win. "The outcome is uncertain", Barron's
- [3] "The king of Asia's private equity, hitting Hong Kong's largest IPO this year!" Per capita salary is 3.8 million yuan", ipo observation
