Return to 1958 and build a century-old giant

Chapter 891 Opportunities to Invest in General Electric

Yang Wendong's fame had reached its peak throughout the United States, and various media outlets kept sending interview requests, but Yang Wendong politely declined them all.

Just like in Hong Kong, he can accept being famous anywhere, but he would rather not let too many people know about his photos and the like.

Although some reports already included photos, in the pre-internet era, as long as it was done at a certain cost to ensure that one's image would not appear in the media again, over time, everything would be forgotten, and most people would not remember it.

Even in the internet age, mainland netizens in their previous lives generally only knew a few or a dozen super-rich people. As for the others, they had only heard of their names. If these people were to stand in front of them in person, most people would not recognize them.
The most convenient point is that he knows Murdoch. Although he has not invested much in News Corporation, many of his own companies are major clients of News Corporation. In addition, controlling public opinion is not free. If there is profit to be made, News Corporation or other media are still willing to cooperate.

Paying these prices is ultimately for one's own safety and a reasonable degree of freedom; sometimes, too much fame is not a good thing.
The outside disturbances did not cause Yang Wendong and others too much trouble.
The day after the party, several financial giants, including Goldman Sachs, Morgan Stanley, and the Coal Retirement Fund, met with Yang Wendong to discuss financing for KFC.

This financing had been in preparation for a long time, and KFC had also provided the relevant information. Yang Wendong had also given a valuation offer long ago. Today was just a final decision with a group of investors.

Ultimately, after several hours of negotiations, an agreement was reached among all parties, with KFC agreeing to raise 20% of its investment from six investors through a targeted financing round.

KFC also received $2.3 million in funding, and Yang Wendong's shareholding decreased to 80%.

"Haha, I wish us a pleasant collaboration." Top-quality red wine had been prepared in the meeting room, just waiting for the celebration after the success.

"Thank you all for your investment." Yang Wendong raised his glass and said, "With the new funds, I hope KFC can expand further. At the same time, according to our agreement, you all need to become franchisees. You have the property, and I have the management team. It's a perfect match."

These shareholders are able to enter the market not just because they need funds; if it were just about funds, Yang Wendong himself would have plenty.
One of the conditions of the financing negotiations was that the six new shareholders would use their high-quality property resources in many cities to franchise KFC, thereby further and rapidly increasing the number of KFC stores and reducing average operating costs.

This is a win-win situation. KFC currently adopts a franchise model and does not invest in real estate, while these shareholders are top investment companies with a large number of properties. KFC's business model can basically guarantee that they will be able to make profits in the future.

“Haha, great! Deutsche Bank would be happy if KFC could open enough stores in Germany,” Klaus of Deutsche Bank said with a smile.

Although Deutsche Bank successfully became an underwriter for Best Buy's IPO, it did not invest in previous financing rounds, so it did not earn much profit.
Now, they have successfully invested in KFC. Of course, they were selected because they have enough political and economic resources in Europe to cooperate with KFC's future development in the European market.
Yang Wendong raised his glass and said, "No problem, Germany and France are key expansion targets for KFC in the future."

KFC will continue to expand in the United States, but its potential is already limited, while there are still many opportunities in the European market. This is why he chose Deutsche Bank, at least to secure the German market first.

"When does KFC plan to go public?" a vice president at Morgan Stanley asked.

Yang Wendong replied, "According to US law, we will conduct another round of financing in six months, and then we will submit the application again. It is estimated that we can go public in 82 or 83."

He would arrange for companies that were eligible to go public to do so before 1987, so that he could cash out a large amount of money before the stock market crash and then buy back the stocks at a low price after the crash.
The profits from exploiting these financial investors may far exceed the profits earned by the companies themselves.

The famous Hong Kong stock market sniper, Lau, originally turned to illegal stock trading after discovering that he could make money much faster from stocks than from making electric fans.

"We look forward to that day coming soon," said several investment bank executives with smiles.

For companies like those under Yang Wendong's control, going public would be a huge piece of meat.

It's important to understand that most American companies prepare to go public once they reach a certain size and meet the listing requirements. Therefore, they are usually not very large, with a market capitalization of only tens of millions of dollars. Only a very small number of them go public after their market capitalization exceeds 100 million dollars.
However, after more than a decade of low-key investment and development, many of Yang Wendong's businesses have reached a scale of one billion US dollars, and the listing of companies of this scale has been rare in the past few decades.

It's perfectly normal for investment banks to want to be their underwriters.

Yang Wendong nodded and said, "I also hope to go public as soon as possible. Then I will discuss cooperation with you all."

For some companies that didn't benefit much from his expert guidance but needed external resources, he was also preparing to arrange for them to go public.
After going public, a company gains financial value, making it easier to raise funds for development and securing a large number of shareholders, which also makes further expansion and investment much easier.

After the meeting, Yang Wendong escorted everyone downstairs, but Barney from Goldman Sachs stayed behind.

"Barney? Is there anything else?" Yang Wendong asked.

Barney glanced around to make sure no one was watching, then asked, "Eric, are you using your funds to acquire large amounts of stock in General Electric and Coca-Cola?"

"You found out pretty quickly, didn't you?" Yang Wendong admitted frankly. There was no need to hide it, and he planned to announce it later.

Barney said, “We have many partners in our investment bank. A few of them were preparing to buy shares in several large companies. They tracked the stock prices and found that there had been a lot of buying recently. After investigating, they discovered that the funds were from your people.”

"Your channels are really powerful." Yang Wendong frowned.
Discovering that someone is buying stocks is not difficult, but pinpointing who is buying them is not easy; it requires using official connections to find the corresponding account.
However, this behavior is illegal according to the law.

“It’s not what you think,” Barney quickly explained. “Your company’s financial firm has made many moves in the stock market and has developed certain patterns. We also collect these patterns and keep them on file for large capital like this.”

Like this time, it was really just suspicion; there was no concrete evidence, which is why I was able to confirm it with you.

"I see." Yang Wendong nodded;
In stock market and financial operations, the methods employed by many professionals do indeed follow certain patterns.

However, this type of investigation is only suitable for large corporations, as it reduces the number of suspects and allows for more precise targeting.

Barney asked, "You don't have any designs on these two companies, do you?" "You're overthinking it. I don't have that kind of financial strength. This is just a simple economic investment," Yang Wendong shook his head and said.

Coca-Cola's market value is over $40 billion, so if he puts in a lot of effort, there's still a chance. But with General Electric's market value at over $130 billion, forget about it.
Besides, these two are top American companies, and the latter has significant ties to the US military industry. No matter how much money foreign capital has, it is impossible for them to succeed.

"Oh, I see." Barney thought for a moment and said, "Actually, there's something you might be interested in."

Yang Wendong asked, "What's the matter? Is it related to General Electric and Coca-Cola?"

“It’s about General Electric,” Barney laughed. “Jack Welch approached Goldman Sachs, and probably other investment banks as well. He’s planning to bring in other capital to General Electric.”

I hadn't initially noticed that your investments didn't seem to involve much in traditional manufacturing, so I hadn't brought it up. But now that you're acquiring General Electric stock, perhaps a collaboration could be possible.

"Jack Welch is looking for external capital? Is GE's business not doing well?" Yang Wendong asked. "I remember checking GE's financial report, and its profits were quite good. Last year, its net profit was close to $8.8 million."

The oil crisis has impacted the global economy, but General Electric has an absolute technological lead in many fields, so its profits are still very high; otherwise, it wouldn't have a market value of $130 billion.

Barney nodded and said, "That's true, but listed companies' financial reports can only show short-term and long-term issues; they can't be published."

Jack Welch had only just taken over General Electric when he discovered that the company had serious problems.

"What kind of question?" Yang Wendong asked in return.

Barney said, "It's normal for a century-old company to have all sorts of internal problems; the bureaucratic systems are just too severe."

Yang Wendong asked curiously, "Would he casually tell outsiders about something like this?"

Barney replied with a smile: "It's not a big secret. Less than a month after Welch took office, he proposed a strategy of streamlining the workforce and cutting some businesses."
This matter has made local news headlines, so what's the point of hiding it?

“It’s true that established companies like this often have these kinds of problems, but what does that have to do with financing?” Yang Wendong asked again. “General Electric shouldn’t be short of funds right now, should it?”

Barney shook his head and said, "It's not a funding issue, but Welch's actions. He's affected too many forces, including the board of directors and major shareholders. Many of them are like bloodsuckers who are leeching off the company. You should know about the things that happen with listed companies."
Therefore, he considered introducing other capital to dilute the voting rights of these existing shareholders, while simultaneously securing their support.

"So that's how it is." Yang Wendong understood as well.

Besides the benefits of attracting resources and financing, another advantage of listed companies is that the controlling family can exploit them for personal gain. For example, they can outsource projects of the listed company to their wholly-owned subsidiaries, or their wholly-owned subsidiaries can become suppliers to the listed company. There are too many ways to do this.

When it comes to such matters involving controlling families, things are a bit better. Generally speaking, controlling families, for the sake of long-term considerations, will not do anything too outrageous and will pursue a steady and sustainable approach.

But if a group of people do this, such as the various directors and senior executives, then these people will not think much, but will only think about taking as much as possible as possible, otherwise it will benefit others.

Many established companies are in this situation: if the company still has enough market share, it will only suffer a major blow, but if it is a matter of life and death, these people will take the company's life.
For example, Kodak and Nokia in the past, it was obvious to everyone that if they didn't transform, they would die. But there were too many vested interests within the company that prevented the transformation, and then the whole company went out of business.

General Electric's problems may not be that serious right now, but Welch is also thinking about reforms, which naturally affects the interests of too many people, and he needs external forces to get involved.

"What do you think?" Barney asked.
Yang Wendong said, "I can get involved, but I am, after all, a foreign investor. General Electric is a top-tier manufacturing company in the United States. Foreign investors can't invest too much, right?"

Barney said, "You don't need to invest a lot. Welch was able to become the new CEO because he already had a lot of supporters. What he lacks now is just another force that can break the balance."

"So all I need to do is become a slightly powerful shareholder in GE and side with Welch, and that's it?" Yang Wendong asked.

Barney said, "Yes, that's pretty much it."

Yang Wendong said, "Alright, but since that's the case, then I don't need to continue acquiring shares on the stock market. Why don't we have Welch issue me shares through a private placement?"
This way, I won't need to spend any extra money, and General Electric will be able to obtain more funds.

General Electric's future potential may not be as great as Microsoft's, but its ability to fund its operations is a unique advantage.
Barney said, "That might not be easy. Welch's opponents should also know his purpose. If it's a private placement, it will need to be approved by the board of directors."

“Then we’ll see. If it really doesn’t go through, I can acquire it through the stock market, or I can contact some other shareholders directly,” Yang Wendong nodded and said.

Barney thought for a moment and said, "How about this, I arrange for you to meet with Welch? You are both heads of the world's top conglomerates, and perhaps there are other areas of cooperation besides this?"

"Okay, I'll arrange it as soon as possible," Yang Wendong agreed.
He greatly admired the top 100 CEOs in 20th-century history, such as Lee Iacocca of Chrysler. Even if these people didn't work for him, investing in their companies could bring him huge returns.

Barney agreed, “Okay, GE’s headquarters are in Connecticut, which is close to New York, but I’m not sure if Welch will be able to come to New York in the next few days.”

“It’s alright, I can also go to GE’s headquarters. It would be good for me to visit a company like that,” Yang Wendong said casually.

General Electric is a top industrial giant, and I don't know much about it. If I go and see it in person, I might find other opportunities for cooperation besides investing in it.

PS: Please give me a monthly ticket
(End of this chapter)