Those Years When I Was Forced to Top the Forbes List

Chapter 399 The Beginning of JD.com's Refinancing in the Semiconductor Industry

"Shop online at JD.com, save money and shop with confidence, Jingdong—"

That evening, a JD.com advertisement from Guangxi TV appeared on the TV on the wall of the private room. It lasted for 6.5 seconds and flashed by in an instant.

Liu Qiangdong, Zhu Xiaohu of GSR Ventures (2000 million RMB), Wang Gongquan of CDH Investments (2000 million RMB), Zhu Linan of Legend Capital (1000 million RMB), Zhao Linghuan of Hony Capital (1000 million RMB), Xu Xin of Capital Today (1000 million RMB), Lei Jun of Shunwei Capital (500 million RMB), Zhou Kui of Sequoia Capital (500 million RMB), and Xiong Xiaoge of IDG (300 million RMB) were present.

The shareholders are Chen Xuebing, Cai Zhijian, and Xin Mengzhen of An Holdings (3500 million).

All units are in US dollars.

This is a $1.18 million scheme.

"Ha!" Dongzi grinned heartily, "This 'Jingdong' sound was added at Mr. Chen's suggestion! These short ads have a very high retention rate! They're also very memorable! We're now airing these ads on several provincial TV stations, and our company name spreads very quickly! After changing 360BUY's domain name to JD.COM according to Mr. Chen's idea, the click-through rate has increased by more than 30% every month. We have to thank Mr. Chen for that!"

He spared no effort in praising President Chen, but in reality, he was exaggerating JD.com's reputation.

JD.com is indeed not what it used to be.

As a B2C leader, no one compares it to Newegg, the American company focused on consumer electronics, anymore. Instead, it is compared to Amazon China (which acquired Lei Jun's Joyo.com) and Tencent's Paipai.com.

A full-category online retailer.

However, it is still far behind Taobao, and even compared with eBay, there is still a considerable sales gap.

With Taobao's IPO imminent, Jack Ma is becoming increasingly adept at hype, creating increasingly impressive concepts. He aims to build an all-encompassing online marketplace, accounting for approximately 63% of the overall online retail market transaction volume, with the remaining 37% shared by eBay, JD.com, Paipai, Amazon China, and Dangdang.

Mr. Ma truly lives up to his surname, leaving everyone else in the dust.

Everyone is guessing that once Taobao starts its B2C business, no one will survive.

"I heard that President Chen has now invested in Alibaba," Zhu Linan suddenly said, bringing even more disheartening news to everyone present.

Zhao Linghuan chimed in quietly, "At the Hong Kong Internet Conference, Mr. Chen had Mr. Ma invite so many people, but not even Mr. Liu?"

Alibaba is now at odds with Yahoo, trying to force Yahoo to withdraw its investment and allow Alibaba to take over. This is clearly no longer a simple matter of "opening the door for fellow countrymen." I've heard that Yahoo is in a rather passive position, and its management and major shareholder, Masayoshi Son, have reached an agreement.

News of Jack Ma's invitation to numerous internet companies to hold a meeting in Hong Kong has also spread to a limited extent.

Zhu Linan and Zhao Lihuan, who belonged to the Lenovo group, naturally knew about it.

When this news was announced, some people present were surprised, while others remained calm.

Dongzi's expression froze.

What internet conference?

He doesn't know!
"Hmph." Chen Xuebing cleared his throat: "The Hong Kong Internet Conference is just a preliminary step for the mainland Internet business. It's all attended by the heads of the companies. Mr. Liu is very busy right now. He just needs to do his own thing. There's no need for him to participate. If the Internet framework there is finalized, JD.com will be involved."

"As for Alibaba's investment, I am willing to invest, but that doesn't mean I'm not paying attention to JD.com. The reason I'm discussing this with everyone today is not because I'm unwilling to invest in the Series D round, but because Mr. Liu feels there's no need to continue diluting the shares for the time being. I still stand by what I said about the $7500 million I agreed to take over your shares. If anyone wants to withdraw, I can do so right now."

JD.com was built by his hype.

The initial three-round investment fast track boosted JD.com's valuation to $3 million within a month, on the condition that Chen Xuebing would invest $1.25 million at a $5 million valuation six months later, of which $7500 million would be used to acquire a portion of the shares held by the investors.

He's currently short of funds, and the plan to exit the TMT fund before April has been temporarily cancelled. As for continuing to invest in JD.com, he'd rather avoid trouble.

However, if he wants to avoid trouble, he can't be soft, otherwise there will be more trouble.

$7500 million, which is 5.8 million at the current exchange rate, is not something he can't come up with if he wants to.

BOE Technology Group's portion of its TMT fund will be invested in China Minsheng Bank, but the dividends from Hefei will be directly allocated to Changzheng. As long as the remaining shares in Hefei can be sold smoothly at an average price of 18 yuan, the profit will be 30.52 billion yuan. Adding the 8.1 million yuan profit previously distributed to Hefei, the total profit is 38.62 billion yuan.

He can get around 11.6 billion.

The stock market has now crossed the 3000-point mark and started moving again. Today, the Shanghai Composite Index is at 3328.69. BOE's stock price has also rebounded after the repurchase agreement, reaching 10.6 yuan. If he manipulates the news, he should soon see a selling opportunity.

In addition, he personally owns 7310 million shares of Panzhihua Iron & Steel, which he bought at 4.1 yuan per share and has now risen to 9 yuan, worth nearly 6.6 million yuan.

Although he signed a performance-based agreement for these shares, he did not pledge them, so he could still move them if he wanted to.

In addition, the group has 9.7 million yuan in loans (25 billion yuan - 12.3 billion yuan for land in Chengdu - 3 million yuan final payment for Huijin Building).

Sichuan's pre-sales started in May, and Gu'an Construction can recover funds. It owes the holding group 750 million + 12.3 billion, a total of 19.8 billion, for land acquisition. Gu'an Construction will retain 500 million of this money after the pre-sales for construction expenses, and the rest will be returned to the group. However, whether the houses sell well and how much cash can be recovered in the short term depends on the operating results.

He has a lot of funds available in the near future, and a considerable amount he plans to spend.

The auction of the Chenghua plot of land allows for payment to be made in two installments over two years, with the first installment being 30%.

Yufu initially borrowed 400 million yuan, and the third installment (out of four) of the joint venture loan from Huawei and Spreadtrum was 300 million yuan, both of which were due in May.

The stock market should buy shares in Minsheng Bank, Qidian should build an industrial park, Shanghai should acquire land, and the stock market returns of the Long March Fund should not be touched for the time being, but should be used to accumulate interest and invest in Alibaba.

Some things can be resolved through maneuvering. For example, there is a causal relationship between Qidian's construction of the industrial park, land purchase, and purchase of Minsheng Bank. With Minsheng Bank's support, he can obtain large loans for land purchase and construction of the industrial park in the future. He will soon be able to leverage the resources of banks and trusts.

Of course, in order to comply with regulations, he must invest 20%-30% of his own funds in order to obtain the remaining 70%-80% of the loan.

In conclusion, any cash that can be kept should be kept.

"We are very optimistic about JD.com, and we have prepared 14 billion yuan in cash. We are here today to talk to you about share buybacks."

Cai Zhijian pushed up his glasses and smiled confidently, following the script.

Everyone was surprised.

"14 billion? Isn't it 7500 million US dollars?"

"Is the exchange rate 7.73 now?"

Before long, a clever person in the room spoke up.

Zhu Xiaohu hesitated and asked, "Does President Chen mean to buy back all of our shares?"

Chen Xuebing nodded with a smile.

“Currently, I hold 29.5% of JD.com, Mr. Liu holds 33.6%, and together we hold 63.1%. The remaining 36.9% is in your hands. Based on a valuation of $500 million, your equity is worth $1.845 million, or 14.26 billion RMB. I think some of you will keep some shares. I have prepared 14 billion RMB, which should be enough.”

Upon hearing this, Xu Xin shook his head vigorously, like a rattle-drum.

"I'm not selling! Mr. Chen, I decided to invest in JD.com even earlier than you! I originally planned to be a major shareholder, but because of your interference, I only got 4.44%, which is very unlucky! I'm also planning to increase my investment today!"

She has the best understanding of JD.com's offline warehouse turnover model. Now, she has shifted from electronic consumer goods to all categories and has achieved a 3% share of the overall market transaction volume, which can be said to have met her expectations ahead of schedule.

"JD.com's 3% market share is small! But this is a transaction market worth tens of billions of yuan. Compared to the early days of JD.com focusing on electronics, the current full range of products has expanded dozens of times!"
"So what if Alibaba is big? They don't charge their merchants, and the Taobao platform doesn't make money! They rely entirely on B2B funding, and their net profit last year was only 2.7 million!"
Even if JD.com takes 3%, with sales of over a billion yuan, their gross profit margin during the expansion phase reaches 5%!

"Alibaba is used to operating with a light asset model and made its fortune through websites. It has never done any physical business. Even if it enters the B2C market, it will not be able to compete with JD.com."

"In the B2C market, JD.com dominates, and that's enough. JD.com isn't big enough because the market isn't big enough!"

Sister Xu was also a little worried that others might actually sell their shares, leaving her alone and helpless. She tried her best to persuade JD.com, and at the end of her sentence, she offered her own opinion: "I think, since President Chen said he would buy shares for 7500 million and increase capital by 5000 million, why not just give that 5000 million US dollars to JD.com as capital increase? President Liu is doing a good job, why would he withdraw his shares? Many hands make light work!"

She didn't want Chen Xuebing to acquire 7500 million shares, because if he did, Chen Xuebing would increase his stake by another 15%, bringing his total shareholding to 44.5%, which was not far from controlling the company.

如果以5亿估值只增资5000万，那么大家的比例回缩至90%，陈学兵的29.5%变26.55%，加10%是36.55%。

Moreover, the money has gone into the company. JD.com is indeed short of money to build first-tier warehouses. Many of you here have not yet received the full amount of money. The payment is made in installments over four quarters, and so far it has only been two quarters.

Of the $1.18 million in funding, only $5000 million has been received so far, whereas she initially paid off $1000 million in one lump sum.

Dongzi immediately gave Sister Xu a grateful look.

He's even more panicked now that Mr. Chen wants to acquire the shares this way!
Chen Xuebing acquired 36.9% of the shares, giving him a 66.4% stake! He's just 0.02% away from absolute control! Will he dare to raise funds again?
With just a little financing, the company could belong to someone else!
“Hehe, I think President Xu’s suggestion is better, but since President Chen has prepared 14 billion, it’s fine to invest it all in the company.” Xiong Xiaoge saw through something and spoke up.

He was just a small shareholder with a $300 million investment, and those watching the drama were eager for things to get out of hand.

Chen Xuebing grinned and said, "Hehe, you're all waiting for me to take JD.com by the helm, right? If you're going to increase investment like this, then let's all do it together, proportionally. I'll put in 14 billion, and you'll have to contribute 18 billion, right?"

He's not afraid of further capital increases; it's not like he'll pay it all at once. He'll definitely have to pay JD.com quarterly. Of the 3000 million he invested in the Series C round, he's only paid 1200 million so far.

"Mr. Chen, do you really think JD.com can go public?" Zhao Linghuan asked.

Investors are not all the same. Among the investors here today, only Zhu Xiaohu, Zhou Kui, and Xiong Xiaoge specialize in TMT.

Wang Gongquan and Xu Xin are VCs who invest in early-stage projects, such as chain stores.

Zhao Linghuan, on the other hand, works in the state-owned enterprise sector, such as China Glass and CSPC Pharmaceutical Group. These are all large-scale, late-stage projects, and his investment logic is completely different.

He understands the concept of internet financing, but e-commerce is also an emerging field in the internet industry, with a total market of tens of billions. Logically speaking, it would be enough to create one or two listed companies.

"I've talked about the market prospects many times, and I don't want to talk about it anymore. Today I'll just talk about going public."

"You know Spreadtrum, right? They were already lined up for their US IPO this year, with an initial valuation of $20 billion, but now they've cancelled it."

"I cancelled it and am preparing to relist in Hong Kong."

"Changzheng Capital is going to enter the securities industry this year. I am the major shareholder of Spreadtrum, so we will create our own hype and handle the listing process ourselves."

"We will push our invested companies to go public one by one, including those listed on the A-share market, the New Third Board, and the Hong Kong Stock Exchange. Our subsidiaries under GuAn will also promote their own companies and issue their own shares."

"Whether we can successfully launch the project or not, everyone will soon see the results. As long as we can successfully leverage the reputation of the brokerage firm and smoothly navigate the relatively demanding dual listing process, Nasdaq will be no problem at all."

When Chen Xuebing calmly delivered this momentous news, everyone listened quietly.

The reputation of Changzheng is getting stronger and stronger. The 42 billion yuan investment in the 3G fund has already been recouped, and the principal is still making money in the market. People in the industry have all heard about this.

They don't know how much Spreadtrum made in the piracy market, nor are they clear about Chen Xuebing's shareholding, but some people have heard that Spreadtrum entered the TD base station construction this year as a telecommunications company.

A valuation of $20 billion is probably not unfounded.

This level of investment is rarely encountered by most people. Those who can afford it are mostly international capital. Mr. Chen is actually a major shareholder, holding such a controlling stake that he can halt an IPO. With everyone's shrewdness, they can only keep a straight face on the surface, but they have already realized the gap between Mr. Chen and themselves.

The gap is widening. JD.com, which they value highly, and Alibaba, which they deeply regret, are just the tip of the iceberg for President Chen.

He also wants to work as a securities firm.

"Mr. Chen, did your company, Changzheng, acquire a securities firm? I haven't heard of that. Which securities firm?" Zhu Xiaohu asked.

GSR Ventures still holds a place in the domestic capital market, mainly focusing on angel rounds to Series A, but it will continue to invest in the long term. It has invested in Inspur, and it also led the financing of SMIC in 05. They have been in contact with Spreadtrum. Today, they suddenly heard that Spreadtrum's US IPO was suspended. Zhu Xiaohu was very surprised, but as an investor, he must not show such important information on his face.

“Southwest Securities, whose major shareholder is Chongqing Yufu Capital, is an asset management platform in Chongqing that I have been cooperating with. Although this platform is not mine, it is not difficult to take a stake and lead the listing. This time, I want to take advantage of Spreadtrum’s withdrawal from the US and its move to Hong Kong to help this securities company obtain a brokerage license in the Hong Kong market.”

Chen Xuebing and He Zhiya had long discussed cooperation with Southwest Securities. Yufu holds nearly 60% of Southwest Securities' shares, with the remaining shares held by some state-owned enterprises in Chongqing. The company had previously been in poor operating condition, with liabilities exceeding net assets, and had undergone a long period of restructuring. He Zhiya had been hoping that he could acquire the shares of the other shareholders of Southwest Securities and participate in its operation, using Changzheng's investment acumen and seat binding to help them build investment banking and brokerage businesses, achieve profitability, and go public through a backdoor listing.

While acquiring a 51% controlling stake in a securities firm is extremely difficult, by cooperating with Yufu, he can essentially achieve a situation where he doesn't need to hold a controlling stake, yet it's equivalent to holding one.

Moreover, with the Chongqing Yufu State-owned Assets Management Platform brand involved, the application qualifications for Hong Kong securities firms are not a problem.

However, since we want to enter the Hong Kong market, the name "Southwest Securities" isn't ideal; we need to change it.

"Oh," Zhu Xiaohu also knew that it was difficult for private enterprises to enter the securities business, so he asked about it.

If it's Yu Fu, then Mr. Chen is from the Southwest. That makes sense.

"With Mr. Chen entering the securities industry and also having involvement in trusts and funds, is Changzheng aiming for a full range of financial licenses?"

"Insurance will not be offered for the time being."

Chen Xuebing was actually quite interested in the Jinsha River, so he answered all questions.

The main reason is that GSR Ventures has invested over 60% of its funds in the semiconductor/communications sector in recent years, which is related to another matter he wants to discuss today.

Having said that, everyone understood.

If you don't just do insurance, then you have to go into banking.

A true master of all licenses.

The information possessed by such a powerful figure is far beyond what a small fund can compare to.

A single conversation with him is worth more than attending numerous financial conferences throughout the year.

JD.com's future prospects are thus clear.

The initial skepticism returned to ambiguity, and for the next twenty minutes, until the waiter served the food, no one mentioned the issue of selling shares again. Instead, they started talking about unrelated financial news.

The atmosphere is great.

Lei Jun was rather quiet today. Kingsoft's IPO has failed repeatedly. He has sent several letters to all employees wishing them a successful IPO, but all of them have been in vain. Now Kingsoft is preparing for its Hong Kong IPO in the second half of the year. Just thinking about it makes him feel exhausted.

When the wine cup was full, Chen Xuebing raised his glass and said with a smile, "I will fulfill the promise of JD.com's Series D funding. I will sign the $5000 million capital increase agreement with Mr. Liu tomorrow. The Series C third phase and the Series D first phase contracts will be received after they are signed. JD.com's recent development has been quite good. I have high hopes for Mr. Liu."

“I also have high hopes for JD.com. Mr. Liu has done a great job in the transformation. On behalf of Capital Today, I am investing an additional ten million!” Xu Xin stood up, holding his glass.

Zhao Lihuan laughed loudly, "President Chen, I said back then that as long as the JD.com brand performs well, I'll go all in on the Series D and Series F rounds, with a valuation of 500 million! Hony Capital will also invest an additional 10 million!"

"Lenovo will invest five million!" Zhu Linan said.

Both of them raised money from foreign capital and were both very generous.

“We at IDG don’t have much money, we can’t compare with you big shots. Let’s double our investment, add another 300 million.”

Xiong Xiaoge spoke haltingly, appearing to be passively co-investing, but in reality, she was secretly exchanging messages with her partner Zhou Quan under the table.

JD.com has increased its investment again, so it has money to expand its logistics warehouses. Maybe I should talk to Liu Qiangdong and privately buy some shares from him at a low price? I've noticed he hasn't changed his shoes in six months; he's definitely short of cash.

Dongzi, who had just experienced a six-month dream of success, was worried that some big shots would withdraw their investment when he arrived. Now, hearing that everyone was going to increase their investment in the company, at a valuation of $500 million, he got excited.

"Thank you all for your trust! Give me another six months, and I, Liu Qiangdong, will definitely deliver a paper that scores over 90 points!"

Dongzi picked up a wine cup, stood up, and blew on it.

The little girl next to him quickly grabbed some paper to wipe the wine stains off his clothes.

"Haha, your name is Zhuang Jia, right? From the purchasing department? I've seen you at JD.com!" Xu Xin joked in a big sisterly tone. "Qiangdong, she's capable and caring, you should cherish her! I think she's better than your ex-wife!"

"What are you saying, Sister Xu!" Dongzi blushed and quickly glanced at Zhuang Jia. He found that Zhuang Jia didn't argue, but just silently wiped the wine off him. He was a little tempted, and his tone changed again: "This is still far from settled!"

"Oh! So it's only halfway there!"

Chen Xuebing chuckled, "President Liu, that girl is so pretty and treats you so well, don't be face-blind."

The topic shifted, and the atmosphere immediately became lively.

Everyone also noticed the girl who was quietly serving food to President Chen; she was as beautiful as an angel.

"Mr. Chen, why don't you introduce your girlfriend?" Lei Jun rarely interjected.

He had met Yang Qingyue before, so seeing Xin Mengzhen again inevitably aroused his curiosity.

Of course, I'm not curious about why Chen Xuebing has two girlfriends, I just want to know who his wife is, or neither of them.

"Hehe, Ms. Xin is not my girlfriend today."

Upon hearing this, everyone perked up.

What does "not today" mean?
“She is the CEO of the listed company we are going to promote next,” Chen Xuebing explained with a smile. “Ms. Xin is a computer OEM manufacturer. Next, we plan to start a Hong Kong semiconductor lithography machine manufacturing company.”

"Within three years, I will get her company listed on the Hong Kong Stock Exchange."

(End of this chapter)