1988: Back to the human world for a few years

Chapter 187 Proportion
Investing is a highly professional matter. Whether it is industry research, project screening, due diligence, or post-investment management, problems in any link may result in the investment being wasted.

Therefore, in later generations, although the financial funds of the local competent authorities are the main component of the guidance fund, the competent authorities will not directly go to the market to find projects to invest in, but will hand over the money in the guidance fund to professional investment institutions for management, which are the so-called GP (general partner); and the competent authorities as the investor are called LP (limited partner).

In fact, it is quite similar to private equity funds in that, generally, private equity funds will have many individual investors acting as LPs; and guidance funds will also invest money into private equity funds as the lead LP... Of course, the lead LP of the guidance fund will generally only invest 20%~30% in a project, and the rest of the funds will all come from social capital. In this way, it can take the lead in some aspects without dividing the whole cake.

How about it? Doesn’t it sound very generous? Doesn’t it give you a feeling that “as long as you have entry capital, the big guys will help you become rich”?

Are you excited and overwhelmed?

Don’t be impatient, there’s more!
After taking care of the feelings of other LPs, the GP should not be treated unfairly, right? After all, the GP is the key to whether a project can make money!
In the future guidance funds, GP's income comes from two sources:
1. Management fee: This fee is generally 2% of the investment amount.

For example, if a private equity fund has a scale of 20 billion, then the GP's annual management fee is 4000 million. Regardless of profit or loss, this fee will be deducted from the fund pool. In a sense, this is the fixed salary of the GP's employees.

2. Performance sharing.

Considering the size of private equity funds, a 2% annual management fee may seem like a very considerable sum to ordinary people, but in fact, for GPs, it is just enough to keep themselves from starving. The real bulk of their profits still comes from performance-based sharing.

Generally speaking, the performance share ratio is about 20% of the "excess profit". In some special cases, this ratio can even reach 50%.

也就是说，如果一个项目，当初的本金是1个亿，与LP们约定的基本收益为10%，最后项目的总回报是2个亿，那么项目的超额利润为：2亿-1亿-1亿X10%=9000万；GP的绩效分成则为9000万X0.2=1800万。

If you have some understanding of private/public funds, you should be able to see that this return mechanism is quite attractive to practitioners. After all, with the support of the A-share market, if 100 million yuan of funds only yields a return of 200 million yuan, it would be a shame for the investment community... At least you have to give me a "tenfold increase", right?

After a tenfold return, the GP’s earnings from the performance share will be truly considerable.

But do you think this is the end?
Do not!
What if, as the largest LP, after the project is successful, the local authority voluntarily gives up its own 20% to 30% share of the excess profits, or even the 10% basic return, and only asks for the return of the principal?

Then both the GP and the other LPs will make a lot of money and be so excited that they need to carry a bottle of quick-acting heart-saving pills with them?
Don’t think this is just YY, many local authorities in later generations did this, making huge concessions, or even giving up all the profits, which was an operation that could not be more routine.

The reason for doing so is, on the one hand, because local authorities in this area often only pursue industrial promotion effects, and do not pursue direct economic returns.

But on the other hand, it is to "make friends"!
That’s right, “make friends”.

This kind of large profit concession that violates market rules is conditional.

And this condition is not what outsiders think, but... return of investment!
The so-called return investment means that after the local competent authorities invest in GP, ​​they require GP to return a certain proportion of funds to the local area to support local industries, thereby boosting employment and revitalizing the regional economy.

This is not surprising, because the essence of the guidance fund is to incubate local industries and promote investment attraction.

However, corresponding to the substantial concession policy of the local authorities is the average return on investment ratio of up to 1.5 times!

In other words, if the local competent authority invests 10 billion yuan into the guidance fund for GP to manage, the GP will have to invest 15 billion yuan back into local enterprises.

It is this additional condition that makes many institutions in later generations reluctant to become the GP of guidance funds...especially those guidance funds from the Midwest.

You know, it's easier to deal with developed coastal cities like Beijing, Shanghai, Guangzhou and Shenzhen. After all, there is a strong entrepreneurial atmosphere and many high-quality targets. As long as the economic environment is on the rise and you can tell a story, GPs will dare to take the money, let alone 1.5 times the return on investment, even if it is 2 times.

But in underdeveloped regions like Northeast China, Gansu, Qinghai, southern Yunnan, and Guizhou, ordinary GPs really don’t have the confidence to complete this return on investment without losing money... Due to the constraints of objective conditions such as the entrepreneurial environment, talents, consumption environment, and business atmosphere, it is really difficult to find a sufficient number of high-quality projects to incubate.

………………

"So... Master, the reason why you are not worried about the current situation getting into trouble is because you are now acting as the GP, and the return on investment has already far exceeded 1.5 times this number?"

Bai Mengmeng seemed to understand something and looked at Yang Mo in amazement.

Although there were no guidance funds in the country at that time, direct investment funds had already appeared in places such as Shekou and Shenzhen Special Economic Zone... Uh, no, it should be called special support funds.

The essential difference between the two is that one lets a third-party professional organization invest, while the other invests personally.

In fact, the subsidy policies that are prevalent in various places at this time are essentially direct investment funds. However, because everyone has little experience in the business sector, they are unable to give any decent guidance, let alone provide effective support to companies in terms of channels, marketing, management talent, etc., so the effect is not obvious.

But if you say that the local authorities have no relevant awareness in this area, then you are underestimating them - the theory of the three pillars of investment, export and consumption has long been introduced to the country, and the only thing lacking now is practical experience.

Bai Mengmeng, who had lived in the compound for ten years, naturally knew some of the situation vaguely. After sorting out some of the logic, she finally understood the real reason why the leaders of Linyi County were so supportive of Yang Mo's actions and even used their own connections to help him get through various links in the Provincial Academy of Agricultural Sciences.

Yang Mo nodded and smiled: "This is an important reason, but it is not the only reason."

Yang Mo thought for a moment and suddenly asked, "Xiao Bai, you have read a lot of materials recently. What do you think is the most common partner in all our projects during this period?"

Which partner appears most frequently?

Bai Mengmeng thought for a moment: "County Agricultural Bureau and County Supply and Marketing System?"

Yang Mo nodded: "That's right. In this package plan, money is just a circulation tool. It must eventually be transformed into technology and commodities and truly implemented in the villagers to achieve a basic value cycle;"

"Then the question is, although the capital was provided by our three oil companies, the channel for converting it into technology and products was deliberately arranged by me through the county agricultural bureau and the supply and marketing system... In other words, I took the initiative to hand over the core link of this plan as a partner, and did not use the huge tertiary industry system of the three oil companies to build my own channel within the county. Do you know what this means?"

Bai Mengmeng thought for a moment: "Master, are you expressing your opinion?" Yang Mo smiled: "Yes, I have been implicitly expressing my position from the beginning... Although from the outside, the principal is almost all from our side, we are both the lead LP and the GP, and the county is more like a peripheral partner... But I just want to be a GP. When the conditions are ripe, I don't mind the county taking out resources to exchange and then become the lead LP!"

Bai Mengmeng understood immediately.

Although the three oil companies have a combined fortune of 7 million, the upper limit of the budget that Yang Mo can invest in the rural grassroots market is actually only 1.3 million.

Although this figure is still very exaggerated in this era, given the situation in Linyi County, if it is not cash but exchange through procedures with resources or policies, it is actually not difficult to come up with the corresponding replacement resources.

Once this model is proven to be feasible, what does it mean to suddenly become the lead LP halfway through?
It means gaining the right to speak in this newly developed county economic operation system, and it means a series of impressive report cards!

Although this gameplay still relies on Yang Mo as the GP, he has already made his position clear and even handed over the two most important core links to you. If you don't know how to return the favor, who will dare to play with you in the future?
By now, Bai Mengmeng was almost certain that if someone planned to put a accusation on Yang Mo, the first one to jump out and testify for him would probably be the competent authority of Linyi County.

Think about it, even the “person involved” has spoken out, can this accusation still be made?
Thinking of this, Bai Mengmeng looked at his master with some fear... After this move, no matter who becomes the next general manager of the drilling company, the position of the top leader of Mo Mo Bai Tou will probably have to fall on Yang Mo. Otherwise, once the special working group is disbanded, no one will be able to find a more suitable role and carrier to continue to serve as the GP.

What a profound design!

I'm afraid that as soon as Wang Yinuo promised to send him to the position of manager of Mo Mo Bai Tou, this new master had already figured out how to secure this promise through various internal and external causes and effects.

Is this guy my age, only three years older than me?

The depth of his thoughts is probably on the same level as Uncle Zhang and the others, right?
After shuddering, Bai Mengmeng suddenly remembered something: "Master, I'm curious. The main projects that Xialiu Marketing Co. has been promoting are basically farm projects, and they are mainly small broiler farms... Didn't Momo Baizha already have a large-scale joint breeding project in the county?"

"Is this because you haven't thought of a better way out for the villagers in the neighboring county, or... did you arrange it this way on purpose?"

As the saying goes, if you master one method, you will master all methods. Ever since she realized that this new master was far more cunning than she had imagined, Yang Mo's arrangements became more and more unfathomable in her eyes.

Although Xialiu Sales Agency is nominally a third-party organization, and their general manager Yan Laoxi is not a simple person, but if you say that the many small chicken farm projects they reported were not specifically induced by Yang Mo, she would not believe it at all... At this time, the countryside is still in the "hundred industries era", and there are countless entrepreneurial projects. How could they all focus on chicken farms?
Hearing the question from his young disciple, Yang Mo smiled and said, "Sorry, this is another topic... Up to now, your three opportunities to ask questions during the probation period have been used up. Before you officially become my disciple, I will not answer your question!"

Ah, ah?

When Bai Mengmeng heard this, he stood there in a daze, and a huge sense of loss rose in his heart.

What Yang Mo told her today was like half a thread, vaguely linking together all the things that had been confusing her. She also figured out many problems at once with an indescribable enlightenment.

But just when she was trying to string all the broken beads together with this half thread, she was told that she no longer had the opportunity to ask questions. The feeling of emptiness and loss that almost made her vomit blood was something that was difficult for others to understand.

Blinking his eyes, Bai Mengmeng's body unconsciously leaned towards Yang Mo while sitting on the chair. Subconsciously, he wanted to use the "Be Good Boy Method" and stand up to pat the master's shoulders and act coquettishly, just like he was dealing with his own old father. Maybe the other party would soften his heart and tell him the answer.

But when he met Yang Mo's half-smile, Bai Mengmeng quickly dismissed this unrealistic idea.

The new master in front of him was an old fox, and one who didn't have a very good impression of him at the beginning. If he went over and acted coquettishly, not only would he not get an answer, but he would also lose points. It would be even more difficult for him to formally become his disciple at that time.

Thinking of this, Bai Mengmeng suddenly became depressed. If it wasn't the wrong occasion, she would even want to slap herself lightly.

If you don't listen to the old man's words, you will suffer a lot!

Uncle Zhang had already said that this master was no simple person, and asked me to perform well and try to leave a good impression on him right from the start.

Now, you want to become my disciple, but the other person may not be willing to accept you as his disciple!
My old father and Uncle Zhang took so much trouble to send me to Qilu, but now they only asked three questions... What a loss!

………………

Looking at the little girl's face squeezing here and there in a very weird posture, Yang Mo found it funny but didn't take it to heart.

A master is not a "teacher". Even if there are many considerations and reasons, it is not wrong to set more rules when it comes to inheritance... It's the same as a book cannot be read without borrowing. Sometimes knowledge is acquired too easily and becomes worthless, not to mention not being easily absorbed by the learners.

However, Bai Mengmeng's last question did hit the nail on the head.

It was indeed his instruction that Xialiu Marketing Agency had been making every effort to induce villagers from neighboring counties to open small chicken farms.

And the reason why this is the case...

This was because a certain Tugou classmate had discovered some bad signs half a month ago. In order to prevent a very likely risk, he had to do this kind of drama to mend the fold before the horse has bolted.

When he thought of his classmate Tugou, Yang Mo suddenly wanted to go back to his own little yard.

If I calculate carefully, it has been almost half a month since I was "recruited" by Wang Yinuo. During this half month, I have either been running around between villages or working in this office in the county town.

Tsk tsk, I haven't heard that girl's chattering noise for more than half a month, and I haven't eaten the whole grain cakes that guy made for me for more than half a month.

Speaking of which...

I'm really not used to it!

(End of this chapter)