alibaba and Mr. Ma, never can cause the attention of the market parties, this time in TV media but also because the source of the $6.5 billion sparked controversy. Attention to the core of the problem including the structure design, leveraged buyouts, source of funds and capital operation that happens.
alibaba group is a privately held company, the capital operation of the whole structure can not known to outsiders, this article is in under the condition of various views on the market at present, alibaba group, the capital operation for a guess and deconstruction.
deal structure design
the whole situation of TV media announcement comprehensively, the transaction should be actually to TV media in alibaba group, which is why with TV media’s controlling shareholder is alibaba group signed a strategic cooperation agreement. While operating in TV media of hangzhou cloud investment partnership is set up in order to complete the deal of “special purpose company” (SPV).
as to why want to set up a special purpose company, is an important reason of TV media industry “radio, TV, film and video recording studios” was listed in national limits in the catalogue of industries for foreign investment, and ready to overseas listing of alibaba group, is the foreign company VIE structures, TV media cannot direct investment.
deal structure design of the second part is the controversial cat technology co., LTD., zhejiang day to Xie Shihuang personal this stake in providing funds to lend. Zhejiang day of cat and special purpose company cloud investment limited partner (LP) Xie Shihuang signed the “loan agreement”, the loan principal shall not exceed 6.537 billion yuan, loan time limit for 10 years from the date of withdrawal, loan compound annual rate of 8%.
since alibaba want to invest in and can’t direct investment, so are bound to take a stake in money to the special purpose company to complete the transaction. How to give the money? As a domestic financial media reports pointed out: the central bank of the general principles for the loans to limit the enterprise loans directly, but to the enterprise to personal loans are not prohibitive provisions. Therefore, by way of borrowing from the personal solve the problem of the legal provide trading funds of this transaction.
usually, deal structure design of a deal, in addition to meet the commercial considerations, such as tax planning considerations, financing considerations, etc.), have meet the policies and regulations, have to meet legal compliance, this is very common in the international mature market takeover. Many international enterprises by setting up a fund, capital operation platform to control their own portfolio.
questioned why alibaba or Tmall not directly buy shares and make a ma, shi yuzhu, Xie Shihuang consisting of three investment company to purchase, which is mainly for personal private interest, there is no too much according to.
the transaction in the media and the Internet is another problem of controversial “empty set of white Wolf” use of leverage. Have questioned said the investment main body is Xie Shihuang personal, but cat provides money all day, I didn’t spend a penny, the leverage ratio high. And questioned said cloud creek investment is ma control company, enjoy the decision-making power of a general partner (GP) ma has invested 9900 yuan, shi yuzhu investment 65 million yuan, accounted for 0.0002%, 0.9943%, of the partnership investment of common control cloud investment. And a limited partner (LP) Xie Shihuang personal investment 6.472 billion yuan, more than 99.0055%, no voice. Ma only 9900 yuan, or 9900 kick-started the capital, the capital operation is the four two dial one thousand catties.
in the first place, if we invest cloud creek as a special purpose company, then the associated with cloud creek investment fund operation arrangement, arrangement, it is not related to personal partner architecture, cannot say Xie Shihuang individuals or ma man with a lever. While standing in the point of view of alibaba group, zhejiang day cat to provide the investment funds, purchase leverage to 0. Secondly, general partners and limited partners investment proportion, say the size of the problem here is practice operation, no particularity.
even if we take a step back, standing on the cloud creek investment point of view of the investment, cloud creek investment itself make full use of the lever. There are many people on the media questioned, collateral assets is newly acquired TV shares, such borrowing to buy assets, in turn, for the loan guarantee, as have the white Wolf.
but with purchase of the property to mortgage purchase funds is internationally popular years of leveraged buy-outs (leveragedbuyout) standard practice. The prominent characteristics of leveraged buy-out is, acquirers for acquisitions, large-scale financing borrowing to pay for transaction price, usually 70% of the total purchase price or all. At the same time, the acquirer to the target company assets and future earnings as loan collateral. Borrowing by the target company’s future cash flow to pay. In other words, “empty white Wolf” is synonymous with leveraged buy-outs.
so, cloud creek investment when on leveraged buyouts in the name of Xie Shihuang personal loan also is very normal deal structure design, behind this will naturally have a series of legal constraints in terms to clear the rights and obligations between the parties body.
even if the transaction structure design can be understood, still some question: cat technology co., LTD., zhejiang day which come this $6.5 billion? Many people worry about the money from balance treasure, from merchant’s margin. About this, have got the day the cat’s response and the interpretation of legal person. Zhejiang day cat written response to the media said: “the borrowed money is their own money day cat company. Day the cat is in good operating conditions and operating every year and net profits funds inflow, the loan to the cat no cash pressure. In addition, Tmall business margin is used only for business default behavior, safeguard consumer rights and interests according to the contract, anyone has no right to also can not be used.” Lawyers also said that the margin depository in the bank, cannot easily use. And balance of money belongs to the monetary fund, to have a clear requirement, more can’t use without authorization.
some analysis, points out that Tmall can own cash flow and assets as collateral to bank loans. But the author consulted a bank, Hong Kong and the mainland have said the 10-year loan of 6.5 billion yuan scale, 8% of the interest rates are hard to provide Hong Kong and international mature market in China is almost impossible, especially in such a long period for 10 years. The cat to the financial media and zhejiang day statement: “the alibaba group so far hasn’t used the letter of the foreign Banks, let alone to misappropriate loans.”
so the question becomes Tmall have may have so much money to invest. Alibaba is not listed, we don’t get really data released but we can use the Beijing east and comparing of the prospectus. Jingdong is a home appliance business, according to its prospectus on sale in America, as of September 30, 2013, jingdong net cash and cash equivalents is 8.8 billion yuan. Jingdong have 8.8 billion yuan in cash, Tmall mall completely may have more cash in the account. Global electricity giant amazon as of December 31, 2013 in cash and cash equivalents for $8.658 billion. Alibaba group’s financial strength shall be completely don’t have to worry about.
in recent years, alibaba, on the one hand, in the media continue to the topic of the group’s overall listing attracted attention, on the other hand is to do A lot of acquisition, in a-share market bought A stake in several media, the hang seng electronic control, China acquired in the Hong Kong market equity, haier culture control, citic A controlling stake in the 21st century in China, the U.S. stocks bought gold software, these bid up billions of amount.
since alibaba is not a listed company, however, we cannot know each transaction source of funds. To know right now, only buy 6.5 billion yuan from zhejiang Tmall, TV media buy hang seng electronic money from its own capital bank loans of 1.7 billion yuan and 1.7 billion yuan (loan from 2 to 3 years, more than 7% at an annual rate, for acquisition of equity pledge), buying gold software $1.1 billion of its own funds from alibaba. Generally speaking, the listed company’s financing ability in the listed company, but the company like ali, through listing, retreat city, has rich experience in capital operation, and there is a lot of cash flow, financing is not a problem.
some question ma at the same time of acquisition, always with their private company with alibaba company to participate in the acquisition, thus to obtain the high personal income. In alibaba and yunfeng, a joint bid for the 21st century, the New York times published stories, said ma personal private-equity firms will undoubtedly benefit. The author points out that in 2007 Google because to a startup founder wife invested millions of dollars by batch. After appearing on the market, such as alibaba, such deals will accept public strict review and question.
however, at this stage, as long as zhejiang Tmall shareholders have no opinion, alibaba’s shareholders have no opinion, the public and have nothing to worry about? Alibaba, the company is not ma one, alibaba partner system, nor jack ma, a person in charge, as long as to perform the necessary decision-making process, how to do it all.
alibaba listed before, of course, to speed up the acquisition of action has two advantages: one is to enhance the overall valuation of the company, although some acquisition is done with jack ma, private companies, but the acquired business still can produce synergies with group business, benefit the group as a whole. The second is before ali is not a public company for capital operation will be more flexible.
of course, as long as it’s unlisted, everything we do analysis is just a guess.