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 already preliminarily negotiated with Abel to subscribe for the share of Smith Capital’s first private placement.

   At that time, the talks were generally settled.

   It was only then that the Manhattan District Attorney's Office began 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 asking Abel for instructions, David met with the managers of Mellon Bank at the headquarters of Smith Capital the next day.

   Mellon Bank is also called Mellon Financial Corporation.

   Yes, David’s ancestor 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, now it can only be said that they 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 wasn't for Merrill Lynch being a giant, and Abel still wants to get something from Merrill Lynch next.

  Merrill Lynch will not even have a share of the 500 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.

  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 again "certified" 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 just like when Peter Lynch and Buffett just emerged.

  When the profit is considerable.

  Even if they have to take some risks, the rich are willing to give it a try.

  Therefore, under the division, three billion US dollars of private placement.

   has been subscribed.

  Merrill Lynch can get up to 500 million. This is because Abel wants to get some resources from Merrill Lynch.

   will leave so many shares as a deal with Merrill Lynch.

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

  In fact, he also wanted to come to the door earlier.

   But Merrill Lynch still has concerns.

  After dispelling such worries, Charlie Schaff came to the door.

   But it's 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.

  Parallel time and space, Merrill Lynch was finally unable to withstand the 2008 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 Schaaf no longer hesitated, he said decisively: "No problem. What about the details of the contract?"

   "啪~"

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

   "It's all over here, sir." David smiled.

"thanks."

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

  Charlie Scharf checked carefully and found that the front was generally quite satisfactory.

  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 of 1% must be paid, which is charged outside the price.

   That is, if the subscription is 1 million and the subscription fee rate is 1%, you need to remit 1.01 million funds.

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

   These are pretty normal.

   Outrageous is the management fee.

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

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

   Nothing wrong, not even 0.1%.

but

  The key is in the bonus commission fee later.

   This value is very high.

  Dividend commission fee refers to the need to extract a certain amount of profit before dividend distribution, as performance compensation to the manager.

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

   Extract a certain percentage of profits by project,

  According to a certain percentage of all profits of the entrusted funds,

   According to a certain percentage of the excess profit proposed to investors beyond the income.

  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%.

   This is a bit ridiculously high.

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

  In this private placement, the closing period in the contract is actually only 180 days.

   For fund managers, the longer the closed period, the better.

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

  Longer ones, even ten, fifteen, or twenty years.

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

  The 180-day closure 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"

   Charlie Schaaf was interrupted by Abel before he could finish speaking.

  He said to David Mellon: "David, tell Mr. Schaff what is Smith Capital's floating profit from March to now."

"Forehead"

   Here we go again, David thought.

   But this set is really easy to use.

  David smiled and said, "It adds up to $3.645 billion. Sir."

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

   "It's $390 million."

   "Very well, thank you David."

"You're welcome."

  After the double reed, Abel looked at Charlie Schaff again.

   "Sir, I have confidence in this one hundred and eighty days.

   Earn 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 want management fees, but the bonus fee is 50%, and the closure period is only 180 days."

  “Because after 180 days, this private sale will be over.

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

   "Now, do you understand sir?"

  (end of this chapter)