America's Road to Wealth

Chapter 78 A bit outrageous private placement

At the banquet of the Hilton family, the top executives of the giants.

In fact, they have initially negotiated with Abel to subscribe for the share of Smith Capital's first private placement.

It was all discussed at that time.

Only then did the Manhattan District Attorney's Office begin investigating Smith Capital.

This move made the capital hyenas with a keen sense of smell have doubts.

In the next few days, none of them who agreed to come to the door came.

But conversely, the sense of smell of these capital hyenas is really sensitive.

Caroline came over that day and said that after the Manhattan District Attorney's Office terminated the investigation of Smith Capital.

That night, someone came to find David Mellon.

After David asked Abel for instructions, he met with the managers of Mellon Bank at the headquarters of Smith Capital the next day.

Mellon Bank is also known as Mellon Financial Corporation.

Yes, David was the founder and owner of this bank.

However, after hundreds of years, although David and his family still have a little share of Mellon Financial Corporation.

But only a little bit.

Mellon Financial Group and David Mellon can only be said to have some connections.

But it is precisely this kind of origin that made Mellon Financial Corporation reach a cooperation with Smith Capital as soon as possible.

Subscribed a certain share of private equity funds.

Then Goldman Sachs, Lehman and other companies also came to the door one after another, before Charlie Schaff came today.

The share of Smith Capital's first private placement is not much left.

If it weren't for Merrill Lynch being a giant, and Abel still wanted to get something from Merrill Lynch next.

Merrill Lynch will not even have a share of the [-] million, because there are really many people who want it.

After all, there are not many other things in New York, but there are really many rich people.

And Abel, the Wolf of Wall Street, has been certified by newspapers such as the New York Times and the Wall Street Post before.

This time it was "certified" again by the Manhattan District Attorney's Office.

Too many local rich people want to try to subscribe for a little share.

To be on the safe side, they won't buy too much.

But it's just like when Peter Lynch and Buffett just emerged.

With considerable profits.

Even if it takes some risks, the rich are willing to try it.

So under the split, $30 billion in private placement.

Already subscribed.

Merrill Lynch can get up to [-] million. This is because Abel wants to get some resources from Merrill Lynch.

Will leave so many shares, used as a deal with Merrill Lynch.

Hearing Abel's words, Charlie Schaff cursed "FXXK" in his heart.

In fact, he also wanted to come early.

But Merrill Lynch still has concerns.

When this worry was over, Charlie Scharf called.

But already a bit late.

Over the past few years, Merrill Lynch has become more and more conservative.

The annual report is half-dead every year, and occasionally even falls.

In parallel time and space, Merrill Lynch finally couldn't handle the 08 subprime mortgage crisis.

It's just that Merrill Lynch's assets are good, and Bank of America came out to take over the offer.

Unlike Lehman, there are too many deaths.

In the end it really died.

Charlie Schaff didn't hesitate anymore, he said decisively: "No problem. What about the details of the contract?"

"Crack~"

Abel snapped his fingers, and David, who had been waiting with a smile on his side, immediately handed a stack of documents to Charlie Schaff.

"It's all there, sir." David smiled.

"Thank you."

Charlie Schaff quickly took it, and quickly flipped through it.

Charlie Scharf took a closer look and found that the front was generally in order.

The subsequent subscription fees and management fees are also quite satisfactory.

For example, the subscription fee is 1%, that is, a one-time subscription fee rate of 1% must be paid, which is charged outside the price.

That is, if the subscription is 100 million and the subscription fee rate is 1%, 101 million funds need to be remitted.

Redemption fees are also normal. 2% is low by Wall Street standards.

These are pretty normal.

Outrageous is the management fee.

Normally, the management fee is generally around 2.5%-5% of the entrusted funds paid each year.

However, in the private placement of Smith Capital, the contract did not require management fees at all.

Not wrong, not even 0.1%.

But
The key is in the bonus commission fee later.

This number is very high.

Dividend royalties refer to the need to extract a certain amount of profit before dividends are distributed as performance compensation to managers.

This fee is only withdrawn during the bonus redemption or bonus reinvestment period, and it can be divided into three forms.

Extract a certain percentage of profits according to the project,
According to a certain percentage of all profit withdrawals of the entrusted funds,
According to a certain percentage of the excess profit proposed to investors.

This ratio is generally around 10%-40%.

10% is low, so very little.

40% is high, so the same is very little.

But Abel's contract requires that the dividend withdrawal fee be as high as 50%.

That's ridiculously high.

But that's not outrageous enough, it's outrageous that Charlie Schaff also saw it.

In this private placement, the closed period in the contract was actually only 180 days.

For fund managers, such things as the closed period are always as long as possible.

The closing period of most private equity funds is almost five years or more.

A little longer, even ten years, 15 years, or 20 years.

Even if it is short, there are generally more than three years.

The 180-day closing period is almost unheard of in the normal fundraising of large funds.

Seeing the end, Charlie Schaff swallowed and his throat moved.

He organized his language, looked at Abel with a relaxed expression, and said softly:
"Sir, this contract is a little too extreme."

"The most extreme thing is this exaggerated bonus fee, and there is a 180-day lock-in period that is very unfavorable to you."

"you"

Before Charlie Schaff could finish speaking, Abel interrupted him.

He said to David Mellon: "David, tell Mr. Scharf what is the floating profit of Smith Capital from March to now."

"Forehead"

Here we go again, thought David.

But this set is really useful.

David smiled and said, "It adds up to $36.45 billion. Sir."

"Then before that, how much was our principal?"

"It's $3.9 million."

"Very well, thank you David."

"You're welcome."

After the oboe, Abel looked at Charlie Schaff again.

"Sir, I am confident in this 180-day period.

Make a lot of profit for you.So this 50% pay is what I deserve. "

"And I also believe that after the end of this 180-day short-term private placement.

You will think that it is worthwhile to give me a 60% bonus commission. "

"So that's why I don't have an administration fee, but a 50% bonus fee and a 180-day lock-in period."

"Because after 180 days, this private placement will be over.

But when Smith Capital made its second private placement, the conditions became different again. "

"Now, do you understand, sir?"

(End of this chapter)