Chapter 12 Chapter 11 Looking at the capital market in all directions

Shi Yuzhu said that he is neither a successful investor nor a successful entrepreneur.Throughout his entrepreneurial journey, at the beginning, he was more entrepreneurial, but later he gradually turned into an investor. Entering the investment field is a new beginning for Shi Yuzhu's career.He invested in the banking industry, listed health products online, and listed online games for financing. These are all his attempts in the investment field.The investment model he believes in is the "Li Ka-shing + Gates" model. Someone once said that Shi Yuzhu has a gambling instinct, which is actually the adventurous spirit of an entrepreneur, and the business cannot be risk-free.The so-called greater the risk, the greater the profit.To enable enterprises to obtain new profit margins and maintain high-speed growth, financing and investment are the only way to go.

Shi Yuzhu is a technical background, and he became famous with the Chinese software M-6401 written by himself in his early years.Since then, he has carried out diversified expansion and made multiple attacks in real estate, health care products, medicine and other fields, but all ended in failure.After re-emerging from the rivers and lakes, he relied on "Melatonin" to stand up, and took the opportunity to participate in China Minsheng Bank and Huaxia Bank. At present, the market value of his holdings has reached 2.2 billion yuan.Later, Shi Yuzhu entered the online game industry.Throughout this series of transformations, it seems difficult to make a consistent positioning of Shi Yuzhu's identity.

In fact, from the day Shi Yuzhu decided to appear in public, he has been playing two roles: entrepreneur and investor.It's just that in the next few years, his investor color has become more and more intense.Especially when he sold melatonin and gold partners to Stone, and more and more investment projects became known to the outside world, people couldn't help exclaiming: Shi Yuzhu has become an investor. In fact, Shi Yuzhu has already identified his own position. He said that his current identity is actually an investor, or a "capitalist" to put it bluntly.He likes the profession of "capitalist" because he is profit-seeking by nature, and the name "giant" has also become a brand in the capital field.

When the new giant company was preparing to be established, Shi Yuzhu once said to the media: "The new giant company will be an investment holding company, and I will be the legal representative, mainly biopharmaceuticals and health products, and it will still be a private enterprise. Giant The brand is still used, even though it has many taints. I must have only one main industry, and I have limited involvement in other industries in the form of equity participation under the premise of no risk.” Shi Yuzhu's current position is the chairman of Giant Investment Company.In recent years, he has been an investor rather than an actual trader.He has already realized the transformation from an industrial entrepreneur to an investment capitalist.He seldom even works part-time in a subsidiary company now, and only serves as a chairman of the "Zhengtu" online game.

Different from the big fanfare when he was a melatonin and gold partner, Shi Yuzhu has always acted in a low-key manner when investing, without any publicity.Therefore, although his product advertisements often appear in the media, the outside world rarely hears about his capital operation and investment projects.When the outside world learns about the relevant information, the project is often mature. However, when Shi Yuzhu regarded himself as a "capitalist", many people in the society subconsciously thought that he was just speculating.Shi Yuzhu retorted: "I will never cash out and leave." Because in his own opinion, he has achieved a soft landing.

After completing capital accumulation through Melatonin, Shi Yuzhu chose to invest in banking.At first, some people concluded that he was using finance as stocks and speculating.However, he has been holding the stocks of Huaxia Bank and Minsheng Bank for four or five years without selling them.It turns out that he was investing for the long term, not speculating short-term. Shi Yuzhu is optimistic about the investment model of "Li Ka-shing + Gates".Bill Gates only focuses on one point, and never pays attention to how other industries make money; Li Ka-shing is an investment-oriented businessman, and his model is what makes money and what to do.The combination of these two people means that on the one hand, you can concentrate on doing one thing, and on the other hand, you can invest in whatever makes money.Specifically, the path chosen by Shi Yuzhu is: concentrate almost all of the manpower into the main industry, concentrate half of the financial resources on the main industry, and leave half of the financial resources for other investments.

Li Ka-shing and Bill Gates are two leaders in the business world. They are the objects that Shi Yuzhu has been studying and researching.Bill Gates works vertically in the professional field, looking for an industry, thoroughly understanding an industry, and making the stock price grow rapidly; Li Ka-shing invests horizontally, doing what he sees makes money in the industry, involving dozens of industries .As an investor, Li Ka-shing has undergone strict project demonstration and clever operation methods to continuously expand the scale of the group.Shi Yuzhu has a deep understanding of both models.

After the giant building failed, Shi Yuzhu not only paid off his debts but also accumulated a large amount of funds by virtue of the huge profits brought by Melatonin.He thought about investing in national debt, because national debt has fixed interest and can be liquidated immediately.However, he later felt that the investment value of national debt was not high, so he gave up.Soon, a better opportunity will come.He took advantage of an accidental opportunity to start an investment bank.While people were still arguing about the life cycle of health care products, Shi Yuzhu already held 2.2 billion yuan in bank stocks.

From Shi Yuzhu's development trajectory, it can be seen that entering the health care product industry is only a springboard for his comeback.He once again completed wealth accumulation through melatonin.After that, his identity gradually changed towards an investor.He claimed that the only thing he will do before retirement is capital operation.Li Ka-shing and Bill Gates represent two business models, and Shi Yuzhu hopes to combine them into one.But it can be seen from his development track that the Li Ka-shing model is more suitable for him. God will only give opportunities to those who are prepared.Shi Yuzhu invested in the bank through the acquisition of the bank's shares. In today's view, it is a bit of a coincidence, but it has nothing to do with his personal choice and long-term preparations.

In 2003, Shi Yuzhu, who was tired of health care products, sold Melatonin and Golden Partner’s intellectual property rights and 75% of its marketing network to Stone Electronics, a Hong Kong-listed company owned by Duan Yongji.The total transaction price is RMB 1.24 billion, of which RMB 636 million is cash and the rest is convertible bonds of Stone Electronics.With hundreds of millions of dollars in cash in hand, Shi Yuzhu wanted to find a safe place to store the cash.A bank is a great place to keep money, but it's the least tech-savvy option.The way Shi Yuzhu chooses to save money is different from ordinary people. His way is to invest.

In 2003, Beijing Huazi Syndicate Company and Shougang Corporation, the promoters of Huaxia Bank, successively transferred 140 million legal person shares of Huaxia Bank to Shi Yuzhu.After every 10 shares were transferred to 2 shares, Shi Yuzhu held a total of 168 million Huaxia Bank shares.As of June 30, 2003, among the 29 shareholders of Huaxia Bank, Shanghai Jiante ranked sixth with a 5.6% shareholding. In 2004, Shanghai Jiante increased its holdings by another 28 million shares, further expanding its shareholding. In 2003, Feng Lun, chairman of the board of directors of Vantone Group, liquidated assets other than non-real estate business, but the stock market was in a downturn, and no one had hundreds of millions of cash to take over the business.Finally, Feng Lun found his old friend Shi Yuzhu and sold him 143 million Minsheng Bank shares at a very cheap price.As a result, Shi Yuzhu became the eighth largest shareholder of Minsheng Bank with a 3.97% shareholding.Afterwards, he intentionally increased his holdings of Minsheng Bank stock, and obtained the position of the seventh largest shareholder. From 2003 to 2006, in less than four years, these bank stocks held by Shi Yuzhu doubled several times.The value of the stocks bought for 300 million yuan once exceeded 13 billion yuan.Moreover, the stocks of the two banks in his hands are different from the legal person stocks that could not be sold, and these stocks can be realized at any time. In such a short period of time, more than 12 billion yuan was earned!There is no doubt that Shi Yuzhu is the "No. 1 man" in the Chinese stock market.People in the investment community were surprised: Everyone thought that Shi Yuzhu would only sell health care products by shouting loudly, but he didn't expect that his investment was also extraordinary.As the sixth largest shareholder of Huaxia Bank and the seventh largest shareholder of Minsheng Bank, Shi Yuzhu is more and more like a financial capital predator. Regarding Shi Yuzhu's move to invest in the bank, the media mostly speculated that he was trying to enter the financial industry, but he himself said that he was not interested in the banking business, and that his investment in the bank was purely for financial investment.Li Ka-shing once said, "Investment depends first on whether the exit mechanism is smooth or not, and secondly on whether the return is high." Shi Yuzhu Investment Bank is out of such considerations.Because in his view, banking is an industry with low risk and strong liquidity. Past failures are equivalent to Shi Yuzhu's sedatives, making him very cautious in investment. He even said, "It's better to miss a hundred projects than to invest in one project."Safety is an important factor that Shi Yuzhu needs to consider when investing.His investment bank is optimistic about the safety of this industry. As long as there is sufficient funds, high profit margins can be guaranteed. Moreover, Shi Yuzhu firmly believes that national banks cannot go bankrupt because of various regulations.Not only the China Securities Regulatory Commission, the China Banking Regulatory Commission, but also shareholders, everyone is staring at it.So relatively speaking, the chance of making mistakes is smaller.To take a step back, if there is a problem with a national bank, the state will not ignore it, because the banking industry is directly involved in stability issues. Regarding the investment in the banking industry, Shi Yuzhu believed that the business would be profitable, and he still wanted to make more investment.It can be seen that once the direction is identified, the appreciation of wealth is not as difficult as people imagine. Shi Yuzhu is good at using extensive and high-profile publicity when marketing health products.His ad impressed everyone, even disgusted them.When operating the health care product sales network to go public, he behaved very low-key, quite dark. In 2006, when the online game "Zhengtu" was looking for an opportunity to go public, someone took the opportunity to ask Shi Yuzhu whether his long-term health care product business should also go public as a whole?Unexpectedly, Shi Yuzhu replied: "The sales network of health care products has already been listed, and it has entered the Hong Kong listed company Stone Holdings." This can't help but surprise the questioner. The listing of Melatonin and Gold Partner Sales Network was completed through a transaction between Giant and Stone Holdings. In December 2003, Stone Holdings reached an acquisition agreement with CentralNew.According to the agreement, Stone Holdings will acquire all the shares issued by the other party. CentralNew held a 75% equity interest in Golden Partner Biotech at the time. In fact, there was some trickery in the middle of this deal.On the surface, the parties to the transaction are not Stone Holdings and Giant Group.The buyer is Stone Giant, and the seller is ReadyFinance.Stone Giant is a wholly-owned subsidiary of Stone Holdings. Its full name is Stone Giant Life Technology Development Co., Ltd., which was registered in the Cayman Islands at the end of December 2003. ReadyFinance is wholly owned by Shi Yuzhu himself, and was incorporated in the British Virgin Islands on December 3, 2002. ReadyFinance is the wholly-owned shareholder of CentralNew, and CentralNew held 75% of the equity interest in Golden Partner Biotech at that time.In fact, CentralNew is registered exclusively for the acquisition of equity interests in golden partner biotech companies.The whole process is dazzling, and it is specially designed by world-renowned accounting firms, law firms, and investment banks. In fact, this is still a transaction between Stone Holdings and Giant Group.Through this transaction, Shi Yuzhu received more than 600 million yuan in cash and 600 million yuan in convertible bonds.In exchange, Stone gets 75% of the sales network of melatonin and gold partners, and the other 25% stays with Giant.For example, the trademark right of Melatonin is placed in Stone, but the production approval is placed in the Wuxi manufacturing plant under the jurisdiction of Jiante Bio.There are also patented technologies such as packaging and production technology placed in Stone. However, what Shi Yuzhu sold to Stone was only the sales network and intellectual property of health care products, and did not sell the main part of the health care product field.In addition, Shi Yuzhu became the CEO and potential largest shareholder of Stone Holdings, so he still manages health care products.In other words, in fact, he just sold from his left hand to his right hand. Some people suspect that the giant is trying to achieve the purpose of backdoor listing through the cooperation with Stone.Shi Yuzhu denied this, saying that it was not as simple as a backdoor listing.Because if it is a backdoor, the shell must be empty, and Stone Holdings actually has content. For example, Stone owns 9.6 million Sina shares. Shi Yuzhu once introduced the ins and outs of this cooperation in detail.It is understood that the two sides officially started talking about this matter in July 2003.At that time, "SARS" had just passed, and after careful research, Stone decided to enter the health industry.Therefore, Duan Yongji, chairman of Stone Group, approached Shi Yuzhu and consulted him on the acquisition of a health care product company.At that time, Shi Yuzhu first recommended Hengshoutang to him, but the two sides did not negotiate.Therefore, Duan Yongji hoped to cooperate directly with Shi Yuzhu, and Shi Yuzhu agreed.What is dramatic is that after Duan Yongji and Shi Yuzhu reached a cooperation intention, the cooperation with Hengshoutang was also negotiated. For this cooperation, Shi Yuzhu later revealed his true thoughts. Giant originally wanted to go public in Hong Kong by itself, and had already found an intermediary agency, but it failed in the end.At that time, Shi Yuzhu did not want to take the route of H-shares, because H-shares may have problems such as legal person shares not being able to circulate, which are very restricted.He wants to go the route of red chips.If listed as envisaged, it should be able to raise about 1 billion yuan.However, the way to become a red chip stock requires a letter of no objection from the China Securities Regulatory Commission.Although it is possible in theory, in fact, the China Securities Regulatory Commission has not produced no objection letters for several companies.Therefore, Shi Yuzhu finally chose to go public for financing through cooperation with Duan Yongji. The reason why Duan Yongji chose to cooperate with Shi Yuzhu was because his own company encountered difficulties.In the previous 10 years, he has been focusing on solving the company's property rights issues.After the property right issue was resolved, Stone's performance was sluggish due to the long-term entanglement in the property right issue.Stone's original main business is no longer very profitable. In order to regroup, Duan Yongji needs to find new profit growth points.So, he fell in love with melatonin and gold partner. In this transaction, Duan Yongji's interests did not immediately appear on the books, and his interests were all in the dark. He found a growth point for Stone to continue to make profits.Melatonin and Golden Partner's super earning power is the fundamental reason why Duan Yongji was chosen. Duan Yongji and Shi Yuzhu have been friends for more than ten years, and he helped Shi Yuzhu at a critical moment, so he absolutely trusts Shi Yuzhu's personality.Through this cooperation, Stone Holdings has achieved a transformation. On the day of the signing, Duan Yongji said that in addition to melatonin and gold partners, Stone Holdings has also purchased eight other health products to be launched, and declared that it will achieve Asian health care. the forefront of the product industry. Shi Yuzhu thinks that the financing channels in the mainland are too narrow, and after joining Stone, he can use the other party's channels to absorb large international funds.Through this transaction, both Duan Yongji and Shi Yuzhu made a lot of profits and achieved a win-win situation.Shi Yuzhu took advantage of this opportunity to enter the international capital market and solved the problem of financing channels. "Companies in the IT industry like to go public on Nasdaq to prove their success. The listing of "Zhengtu" is not for financing and expansion. We already have a lot of money in our books, which is enough to develop and operate new products by ourselves." "I I hope to prove the success of "Zhengtu" through the listing, and at the same time make some employees of the company become tens of millions or billionaires." When these "crazy words" just came out of Shi Yuzhu's mouth, everyone thought he was just Just kidding, but it turns out that Shi Yuzhu's "joke" is serious. On November 1, 2007, Giant Network went public at an issue price of US$15.5 and raised US$887 million.The opening price of the day was 18.25 US dollars, 17.7% higher than the issue price, and the closing price was 18.23 US dollars. Overnight, Giant Network became the online game company with the highest market value in China; overnight, Giant Network created 21 billionaires and 186 millionaires and multimillionaire... Out of affection for the name "Giant", and for the convenience of listing on the New York Stock Exchange in the future, Shi Yuzhu registered Giant Network Technology Co., Ltd. in the Cayman Islands as early as July 2006, and changed its name to Giant Network in June 2007. group. On November 1, 2007, this day was a long-awaited historic moment for Shi Yuzhu.On the same day, he rang the bell for the listing of Giant Network on the New York Stock Exchange.He was wearing a white tracksuit at the time, thus becoming the first bell ringer in the history of the New York Stock Exchange not to wear a suit. As early as the beginning of 2007, Shi Yuzhu said that in the fourth quarter of 2007, the online game "Zhengtu" would be packaged and listed on NASDAQ.In August of the same year, Shi Yuzhu once again revealed in Shanghai that "Zhengtu" technology is seeking to go public. According to expectations, this process will be completed within a few months.Although Shi Yuzhu did not disclose specific details, he admitted that the company has been in a quiet period for listing. On September 16, Zhengtu launched a paid version of "Zhengtu", which changed the previous free model of making money by selling equipment. The outside world speculated that this was a move to cater to Nasdaq's appetite. The New York Stock Exchange has always been strict with listed companies, and has high requirements in terms of the company's assets and profits.The listing requirements and listing conditions for non-US companies are stricter than those of US domestic companies.According to data released by the New York Stock Exchange, only 30% of the 200-400 companies listed in the United States each year meet the standards for listing on the New York Stock Exchange.Although Shi Yuzhu knew that if he chose to list in China or Hong Kong, he would get more financing, but he still chose the New York Stock Exchange, which has stricter listing requirements.Choosing this high-demand and high-standard listing place is to let people see his strength and determination. Of course, for Shi Yuzhu, going public is only the realization of a major goal in his life, and it is far from the end of his career.Even when "Zhengtu" achieved unprecedented success, many so-called online game experts still called Shi Yuzhu a "freak".In their view, Shi Yuzhu, a "half-way monk", never followed the rules and always liked to create new rules for the online game industry. He was too ostentatious and arrogant. Sooner or later, he and his "Zhengtu" would fail.For these remarks, Shi Yuzhu gave a powerful counterattack with the listing of Giant Network. It only took more than 6 months for Giant Company to raise US$1.044 billion from project initiation to successful listing. It is the fastest growing and listed IT company.However, after the company went public, the U.S. stock market underwent a very large adjustment, including corrections by Microsoft and Baidu, and the stock price of Giant Network was cut in half.Wall Street does not agree with the "Chinese story" that a single game can support the company for 5 to 8 years. The stock price of Giant Network has dropped from US$18.25 at the time of listing to around US$10. Faced with this situation, Shi Yuzhu said bluntly: "Investors underestimate this industry as a whole. On the one hand, investors have no confidence in the government, and on the other hand, they really have no vision." In order to prove full confidence in the future development prospects of Giant Network, Shi Yuzhu made another big deal, using US$200 million to repurchase undervalued stocks.The total financing amount of Giant Network’s listing reached more than 1 billion US dollars, and the amount used for repurchase this time accounted for a considerable proportion of the total financing amount.This move gave all investors a reassurance. The 2007 annual financial report handed over by Giant Company also proves why Shi Yuzhu has such strong confidence.Among all listed online game companies in China, Giant Network ranks second only to NetEase in terms of net profit; Giant Network ranks third in terms of sales.More importantly, compared with other listed online game companies, Giant Network has achieved such a good performance with only one product. After successfully landing on the New York Stock Exchange with Giant Network, Shi Yuzhu once said to the media: "IPO is the beginning of my pain. The pressure is even greater, because if we want to maintain growth and win glory for Chinese companies, we must sleep less, not take vacations, and play hard. Do it." From this, it can be seen that Shi Yuzhu has more plans, and he will continue to move forward amidst the controversy. The giant's listing has set some "biggest" records: China's largest IPO private company in the United States, and the largest IPO IT company outside the United States. As expected by Shi Yuzhu, China's online game industry has maintained rapid growth in recent years.According to data released by IDC, China's online game revenue in 2006 was 815 million US dollars, an increase of 73.5% over 2005.It is estimated that by 2011, China's online game revenue will reach 3 billion US dollars, which means that from 2006 to 2011, China's online game revenue will maintain an astonishing growth rate of 30.2% per year.Therefore, it can be said that the successful listing of Giant Network not only marks the success of China's local online games, but also marks that China's online game market has been recognized by world capital. After the listing of Giant Network, due to the enthusiastic subscription of investment institutions, the initial stock offering was a great success.Most of the largest fund companies in the world have participated in the subscription, so that the subscription amount far exceeds the issuance scale, and the price is much higher than the upper limit of US$14 per share disclosed in the prospectus. After the IPO, Giant Network became the online game company with the highest market value in China.According to Shi Yuzhu, Giant's market capitalization is around US$5 billion, far surpassing the second place Shanda, which is only US$2.7 billion, and the third place, NetEase, is slightly lower than Shanda. In the investment market, the most important thing for venture capital is a good entrepreneur, the second is the team, and the third is technology.Shi Yuzhu's high entrepreneurial passion is undoubtedly an important reason to attract investors.After Giant Network obtained such a high valuation from the capital market, Shi Yuzhu attributed the credit to his team. He said: "Global investors are very picky, and they will give a high valuation if they have confidence in us. Investors think that our team Miracles have been created, and new ones will follow, including the next product.” During the roadshows in various places, Shi Yuzhu, one of the top 10 largest fund companies in the world, met 8 of them, and most of them asked questions about himself and his team.Shi Yuzhu concluded from this phenomenon that when fund companies buy stocks, they actually buy people, and they mainly care about the value of people. After the listing, Shi Yuzhu was interviewed by Sina Technology and introduced in detail the great contribution of his team to the listing.When asked "what is the most profound experience of this IPO", Shi Yuzhu replied: "the biggest experience is that investors are concerned about the value of this company. We Chinese investors often look at stocks by looking at this company. How much money you made last year and how much money you made this year. After I contacted foreign funds, I found that they don’t care whether you made money last year, how much money you made, or how much you made this year. They ultimately care about two issues: first The first is whether your group is worth my investment, and the second is how much money you can make next year or the next year." For Shi Yuzhu's famous failure 10 years ago, most Chinese people hold a negative attitude, but most American fund companies appreciate it very much.Shi Yuzhu's legendary experience of rapid rise after failure is undoubtedly an important reason for attracting investors.They even dared to invest money in Shi Yuzhu precisely because of that failure. Shi Yuzhu is full of confidence in his team.He told investors that after listing, the team will not go public-cash out-leave.He also said that the giant's listing created 21 billionaires, but none of them will leave because he knows these people very well. Therefore, as a leader, one of the most important responsibilities is to know people well.Not only must you fully understand your subordinates, but you must also grant them full authority and responsibility. Only in this way can everyone in the team maximize their energy.Since his establishment, Shi Yuzhu has been doing relatively well in this area, and none of the core backbones has ever left. Of course, the growth of the team is not unrelated to Shi Yuzhu's excellent leadership.As far as the research and development team of "Zhengtu" is concerned, Shi Yuzhu can fully mobilize the creativity of the entire 20-person research and development team, while ensuring the high efficiency of research and development.There is a very typical example. At that time, the R&D team put forward many creative ideas during the development of "Age of Heroes", which greatly enriched the game mode, but it was never valued by Shanda's management.After "Zhengtu", Shi Yuzhu led a group of developers to turn these ideas into many game modes in "Zhengtu", and now these game modes have become the selling point of "Zhengtu" online game. As an important means to unite the team, Shi Yuzhu also played games with the R&D team.He often finds problems in the game at three or four in the morning, and then calls the development team to ask for changes.It was during such an integration process that Shi Yuzhu communicated effectively with the R&D personnel, making the other party feel that standing in front of him is not only a boss at work, but also a friend with common interests.Just invisibly, R&D personnel can feel the charm of a business leader, thus generating love for the enterprise. Shi Yuzhu has a technical background and understands the importance of technology very well, so he attaches great importance to his R&D team from beginning to end.He is very proud of the performance of the R&D team.Most people engaged in research and development are not good at speaking, but the experts in online games are those who are silent but can produce great results. When making achievements, Shi Yuzhu did not make a big deal or brag. He always attributed the achievements to others and believed that the achievements were made by the team.Recalling that when he failed, he shouldered the heavy burden and took responsibility alone.So if he fails, someone will help him turn over; if he succeeds, someone will help him continue climbing.Dare to take responsibility and be good at giving credit to the team. For such a person, success must belong to him. To achieve such a brilliant performance, the team is of course indispensable, but Shi Yuzhu's handling of affairs and his leadership quality are also indispensable factors.Attributed to people and focusing on teamwork should be the internal reason why Shi Yuzhu can maneuver in the capital market.