After divorce, I can hear the voice of the future

Chapter 742 ABS (Asset Securitization)

"Then let's issue new shares through a private placement."

Lu Liang, who had been silent all along, suddenly spoke, instantly becoming the focus of the entire room and attracting everyone's attention.

He smiled and looked up at Zheng Jiachun: "After all, arguing any further won't lead to anything, Mr. Zheng, what do you think?"

A veto can only negate a decision.
It is not a right to approve or to act arbitrarily.

If Zheng Jiachun can veto Lao Xu's proposal, then his proposal can also be vetoed by others.

Even if he is the chairman of the board, a joint-stock company, especially a listed company, is never a place where one person can have absolute power.

Even if a shareholder is not on the board of directors, they can still impeach and veto the board's decisions through a shareholders' meeting.

The board of directors is the management of the group, while the shareholders are the true owners of the group. However, most of the time, the shareholders do not dare to offend the board of directors.

Because the shareholders have no real power; they are merely nominal owners of the group.

The relationship between the two sides is not one of superior and subordinate, but rather like that between the ancient court and the common people. A few dozen people can't cause any trouble, but if there are enough people, the dynasty can be changed at any time.

Zheng Jiachun narrowed his eyes slightly, and did not ask Zhou Simin what role Lu Liang was speaking, as he had done with Lao Xu.

Some tactics of feigning ignorance may appear authoritative when used once, but when used twice, they are seen as deliberately causing trouble.

Modern business warfare is about brains, not bloodshed; it's about fighting without breaking apart.

Zheng Jiachun glanced at Qi Yaonian out of the corner of his eye. Just as they had guessed, Lu Liang wanted to start the final battle in the secondary market.

Qi Yaonian said in a deep voice, "Mr. Lu, do you recommend a private placement or a public private placement?"

Private placements of shares are divided into public and private placements. Taking private placements as an example, only 35 institutions are authorized to subscribe.

If it's made public, then it's open to the entire market.

Anyone with money can participate, just like subscribing to new shares.

This is actually a form of corporate financing, but it also applies to anti-takeover cases.

Because stocks don't appear out of thin air, but are distributed through dilution.

If 10% of the shares are issued through a private placement, the Zheng family's shareholding will increase from 49.12% to 44.208%.

Similarly, Hengtai's current 40.21% stake will become 36.189%.

The extra 10% will be directly invested in the secondary market.

"Mr. Zheng, what do you think?"

Lu Liang looked at Zheng Jiachun, his smile unchanged.

In the past two days, the public opinion in Hong Kong has been very abnormal, intentionally portraying him as an aggressor and a villain, while Lao Xu is a treacherous traitor.

The two were accused of being in cahoots.

The Zheng family is undoubtedly the mastermind behind this wave of protests, indicating that they had long anticipated that the poison pill plan would not be successfully implemented.

If this is the basis for judgment, then a public private placement is the inevitable choice.

Because they could exploit the sympathy of retail investors, using them as cannon fodder to wear down Lu Liang's funds.

Even though HSBC is richer than Tianxing, being rich doesn't mean being a sucker. When it's time to fool the scapegoats, they still have to fool them.

"Mr. Lu's suggestion is good. Let's issue 30% of the shares through a private placement."

Zheng Jiachun frowned, annoyed that his intentions had been seen through, but he had no choice but to go along with his train of thought.

They hold 49.12% of the shares, and even after a 30% dilution, they still hold 34.384% of the shares, reaching the threshold of relative control. In contrast, Hengtai will only have 28.147% left.

Moreover, once the issuance of additional shares is chosen, the number of shares in circulation in the market will increase from over three points to over thirty-three points.

With a large number of shareholders, there will be opportunists who try to take advantage of the situation, and their involvement will increase the acquisition costs for the acquiring party.

At that time, if the Zheng family held 50.1% of the shares, they could completely shatter Hengtai's wolfish ambitions.

Private placement is essentially the same as a poison pill plan, but it cannot restrict the acquiring party.

Doing so could easily harm both parties, as Hengtai Group also has the potential to achieve an absolute controlling stake of 50.1%.

If HSBC hadn't offered a price they couldn't refuse, Zheng Jiachun would never have agreed to take such a big risk.

“Chairman Zheng, let’s think this through more carefully. Besides, a 30% increase in share issuance? That’s too much.” He Jiafan’s expression changed slightly.

Once the private placement is approved, Standard Chartered's support will still be important, but it will definitely not be as important as before.

They wanted to play both sides, asking for exorbitant prices and then settling for less, but now neither side wants to play with them anymore?

"Mr. Lu, what do you think?"

Qi Yaonian narrowed his eyes, his gaze towards Lu Liang filled with aggression.

As the events have unfolded, Hengtai's acquisition of New World is not only Xu Jiayin's affair, but also Lu Liang's.

Preventing New World from being acquired by Hang Seng is not just a matter for the Cheng family, but also for HSBC.

Lu Liang wanted to establish his authority and thus gain a foothold in Hong Kong.

HSBC also needs to establish its authority and ensure its position remains unaffected.

Lu Liang could mobilize more people and use several times more funds than he does now, but HSBC was the central bank of Hong Kong during the colonial period, and even now, it is one of only three financial institutions in Hong Kong that have the right to issue currency.

Others may fear Lu Liang's massive financial resources, but they are not. If it really comes down to a fight, the outcome is still uncertain.

Lu Liang smiled and said, "Since Mr. Qi is so confident, we have no objections."

HSBC's intervention was so deep that it exceeded his expectations, but now that the die was cast, he couldn't back down.

The Battle of New World largely determined the future position of Tianxing Financial Group in the Hong Kong market.

The Hong Kong market is too small.

So small that only one dragon head can exist.

"Then let's vote by raising our hands. Those who agree with the private placement, please raise your hands."

As soon as Qi Yaonian finished speaking, Zheng Jiachun raised his hand in response, Lu Liang nodded in agreement, and Zhou Simin also raised his hand in agreement.

With both sides agreeing on their points, Standard Chartered Bank's stance became irrelevant, and the proposal was approved almost unanimously. The meeting then proceeded to discuss the private placement, and the hour-and-a-half meeting flew by.

New World Development applied for a temporary suspension of trading on the Hong Kong Stock Exchange to announce a private placement of 30% of its shares.

"Are the Zheng family brain-dead? Trying to compete with Lu Liang in terms of capital? Are they just asking for trouble?"

The announcement caused an uproar, and onlookers couldn't help but suspect that there might be a mole within the Zheng family.

Until someone leaked the details of the meeting, HSBC decided to go all out to support the Zheng family in defending the new world.

As soon as the news broke, private betting odds for Evergrande's takeover of New World surged, soaring to 1.98.

HSBC's intentions in getting involved are obvious to everyone.

This battle will determine who will be the leader of the next era, so HSBC will go all out.

As the saying goes, the common people can't fight against the officials. Tianxing Lu Liang and Hengtai Xu Jiayin are both common people, while HSBC is an official.

If it weren't for Bank of China, HSBC would be the end of Hong Kong's financial industry, especially considering it holds hundreds of billions of US dollars in reserves.

"Actually, acquiring Chinese Estates would have been enough. Instead, they had to create unnecessary trouble by helping Hengtai acquire New World Development. Now, they've managed to provoke the big boss."

"Hengtai's acquisition of New World is difficult, but not impossible. As long as we take it slow, it will succeed sooner or later. Lu Liang is too eager for quick success."

"Lu Liang's thinking is still stuck in the financial market. You should know that although the financial market and the capital market have the same origin, their rules are very different."

Whether in mainland China, Hong Kong, or internationally, there are voices predicting a downturn.

After all, the Zheng family has the home advantage, and now they also have the financial advantage of HSBC. It's like 80 against 60; they can't imagine the Zheng family losing.

"Speaking of which, does anyone know how retail investors can subscribe to newly issued shares in a private placement?"

The second round of bidding wars is about to break out, and this news undoubtedly gives onlookers a chance to get a piece of the pie.

They all pressed for answers, humbly seeking information, hoping to make a fortune in the battle between Tianxing and HSBC.

Soon after, New World publicly released its financing plan for a private placement of new shares.

The company will issue 7.5 million shares through a private placement, representing 30% of the total share capital, at a price of 55.75 yuan per share.

Subscription begins on Friday, and results will be announced on Monday.

The news sparked a frenzy in the market.

Long queues formed outside both official and private lending institutions.

As of the moment the subscription announcement was released, New World's share price was HK$88.2, with a market capitalization of HK$2072 billion.

Therefore, as long as the subscription is successful, regardless of how things develop afterward, there is a guaranteed return of 60.15%.

It's important to know that new stock offerings typically have a premium of around 30%, and some low-quality stocks might not even have that.

A company that has been listed for over 20 years can actually make more money from private placements than from new shares.

This has driven market investors crazy, and a large number of qualified retail investors from the mainland are flocking to the Shenzhen-Zhenzhen border crossing after hearing the news.

After the meeting, Xu Jiayin followed Lu Liang back to their office in Phase 2 of the Plaza Building.

Only when they were alone did he let his guard down, a look of melancholy on his face: "President Lu, it seems we've gone too far."

It's worth noting that before the rounds of speculative hype, New World Development was worth at most HK$700 billion.

Although Hengtai is short of funds, with Lu Liang's assistance, it's not a piece of cake for them, if not a sure thing.

But ever since HSBC got involved, the whole thing has spiraled out of control like a runaway horse.

With a market capitalization of HK$1295 billion, New World Development issued 30% of its shares through a private placement, bringing its latest market capitalization to HK$2072 billion.

Real estate companies are still paying more than three times the premium; even if they were to acquire the entire company, it would still leave a mess.

The effort put in is far from proportional to the reward, at least for Hengtai.

"Mr. Xu, are you getting scared?"

Lu Liang stood in front of the floor-to-ceiling window with a smile on his lips, holding a thermos cup, overlooking Victoria Harbour.

Amidst a sea of ​​buildings that could send shivers down your spine, the blue harbor stands out exceptionally beautifully.

He certainly knew that, as things had unfolded, the effort had not been proportional to the reward, but that was only in a relative sense.

When Tianxing entered the Hong Kong market, a battle with HSBC was inevitable; now the battle has simply been brought forward.

One has to marvel at the strangeness of life. Lu Liang originally intended to target HSBC, but the Zheng family intervened, causing him to turn his guns around.

After going around in circles, they ended up clashing with HSBC again.

Sure enough, the higher you go, the smaller the circle becomes.

"How could that be?" Xu Jiayin looked displeased and slowly walked to Lu Liang's side: "I'd risk my life to accompany you."

He's like someone who's been tricked; complaining now will only make Lu Liang look down on him, it's pointless.

Since we're here, let's make the best of it.
It's not just a mindset, but a state of being.

"I've heard that HSBC maintains a cash reserve of $1000 billion annually. How do you plan to deal with that?"

Xu Jiayin subtly hinted that, after all, someone as attention-seeking as him wouldn't be worried about things escalating.

He was worried about not being able to win.

Because everyone knows,
The New World is not worth 2072 billion at all.

Even if you win, you can still call it a strategic loss, and you can still put on a brave face.

If you lose, then you really lose.

At that time, Lu Liang will be severely weakened and will have to keep a low profile from now on. Hengtai's collapse will be almost a certainty.

"Ant Group turned 3 billion into 300 billion through ABS (asset securitization)."

Lu Liang suddenly brought up Ant Group, saying to himself, "If Tianxing also uses ABS, how much capital could it leverage?"

(End of this chapter)