Chapter 909
NetEase IPO! Major Shareholders Plan to Reduce Holdings!!
The Gulfstream GIV-SP business jet smoothly pierced through the slightly overcast clouds over Shenzhen, and the vibrant city's silhouette gradually became clear beneath its wings.
Looking down at the familiar Century Tower landmark through the porthole, Lu Yang felt the fatigue of the journey replaced by a sense of homecoming.
The Barcelona sunshine and the Swiss ski resorts seem to be right before my eyes, but at this moment, the atmosphere of the business world is already overwhelming.
The aircraft landed smoothly on the dedicated runway and taxied to the apron.
The cabin door opened, and a gust of wind carrying the damp, cold air characteristic of the South rushed in.
Lu Yang was the first to step down the gangway, followed closely by Yin Mingyue, who was still a little sleepy-eyed, and the nanny carrying Lu Fan, who was wrapped up tightly.
Xiao Jun yawned, and was the last to come down, embracing his new "girlfriend".
Lu Yang didn't have time to pay attention to him.
Because the person who came to pick him up at the airport was not Lu Nini, the chairman's assistant, as he had expected, but Wei Shu, the group's president himself.
She wore a well-tailored dark gray cashmere coat, her long hair was neatly pinned up, and her expression was as calm and capable as ever, but there seemed to be a hint of seriousness between her brows.
Lu Yang was somewhat surprised and quickly stepped forward to greet him: "President Wei? Why did you come in person? You could have just sent Nini to pick us up."
He spoke casually, but his sharp eyes caught the seriousness in Wei Shu's eyes.
Wei Shu bowed slightly, her voice clear and direct, without any unnecessary pleasantries: "Chairman, welcome back. There are two urgent matters that I feel I need to report to you as soon as possible. Nini is handling other matters."
She paused, her gaze sweeping over Yin Mingyue and the children, and added, "First, Mr. Ding from NetEase is here and waiting for you at the company. He mainly wants to report on their IPO progress in the US, and there are some key points that require your decision. Second, regarding the group's overall annual report summary for last year, there are some specific details that I think need to explain to you in person so that you can have a better understanding."
Her frankness and the wording of "it needs your decision" and "it needs to be explained in person" immediately made Lu Yang realize the weight of the matter.
He nodded, turned to Yin Mingyue and said gently, "Mingyue, you take the children home to rest first. I'll go back after I finish dealing with company matters."
Yin Mingyue nodded understandingly and gently instructed, "Okay, don't overwork yourself. We'll be waiting for you at home."
She took the children and the nanny and got into another car and left first.
Xiao Jun patted Lu Yang on the shoulder knowingly, "Boss, I'm leaving now. I'll find you for a drink later." He then got into his car.
Lu Yang then sat down with Wei Shu in the back seat of the large Bentley in the middle.
The car doors closed, shutting out the noise from the outside world, leaving only the low rumble of the engine and the faint scent of leather inside.
"Let's talk about NetEase first." Lu Yang leaned back slightly, turned his gaze to Wei Shu, and got straight to the point.
Wei Shu sat upright and reported in a steady voice: "President Ding has officially started the process of going public in the United States. The overseas underwriters he has found are Deutsche Bank and Merrill Lynch."
She paused, observing Lu Yang's reaction. "However, these two underwriters have proposed that NetEase needs to complete a final round of pre-IPO financing before the official IPO. Mr. Ding's point is that this round of financing is mainly to meet the underwriters' requirements and to introduce some strategic investors with international backgrounds, in order to create momentum for the listing and pave the way for stabilizing the stock price. He is worried that our Century Group, as the major shareholder, may have objections to the dilution of shares, so he came to explain and communicate in person."
Lu Yang listened in silence, his fingers unconsciously tapping lightly on the leather armrest.
Ding Sanshi's concerns are quite normal.
As a key early investor and major shareholder of NetEase, Century Group's decision on whether to participate in the pre-IPO round and how much of its share to relinquish does indeed require his approval.
He could have easily leveraged his connections on Wall Street and the strength of Century Group to deeply intervene in or even dominate this round of financing, just like he did with the listing of Little Prodigy.
Lu Yang knew Ding Sanshi very well.
He is capable, ambitious, and very opinionated.
Since the other party did not take the initiative to ask for help, but instead chose to "explain and communicate," it means that he prefers to operate this final round independently and introduce capital that he approves of.
If you rashly intervene, it will not be a good thing and may even cause unnecessary suspicion.
After a moment's consideration, Lu Yang spoke slowly, his voice carrying a calm confidence: "Understood. Initiating pre-IPO financing is standard practice, offering concessions to underwriters and new strategic investors, and paving the way for an IPO. Our Century Group will not participate in this third round of financing."
A knowing glint flashed in Wei Shu's eyes. She had anticipated that Lu Yang would make this gesture in order to maintain a good working relationship with Ding Sanshi.
She was about to speak when Lu Yang abruptly changed the subject:
"However, I'll go see him in person later. It's better to clarify some things face to face."
Wei Shu nodded: "Okay, Mr. Ding will be waiting in the VIP room next to your office."
The car smoothly entered the urban area of Pengcheng and headed towards the towering Century Tower.
Lu Yang's gaze was fixed on the street scene rushing past the window, but his thoughts were already drifting towards the upcoming meeting.
Regarding NetEase's IPO, a deeper thought was swirling in his mind—that "future memory" as clear as if it were yesterday: the internet bubble would burst this year, shortly after NetEase's IPO!
At that point, the stock price will plummet, crashing from the issue price and ultimately reaching a disastrous level. As a major shareholder, by the time the 180-day lock-up period ends, the value of your shares may be less than a fraction of their current value, making it impossible to cash out at a high price.
A brilliant idea flashed through his mind like lightning: Why not take advantage of this moment, before the bubble bursts and the market frenzy continues, and use this last round of pre-IPO financing to sell a portion of his NetEase shares directly to those eager foreign institutions, ready to pounce and grab a share of the profits? Let them buy at a high price!
If this actually works, it would be a stroke of genius.
This will not only avoid the inevitable losses from a future market crash, but also immediately bring back a huge amount of cash, injecting strong momentum into the next stage of Century Group's development.
Moreover, by voluntarily proposing to transfer shares to new investors, he could also do Ding Sanshi a favor—after all, this would indirectly reduce the pressure on the founder's shares to be diluted.
"That's a perfect idea that benefits both sides." A subtle, calculating smile appeared on Lu Yang's lips.
The VIP room on the top floor of the Century Building, next to the chairman's office.
Ding Sanshi sat somewhat awkwardly on the sofa, the tea in front of him already slightly cold.
Seeing Lu Yang enter accompanied by Wei Shu, he immediately stood up, a warm and respectful smile spreading across his face: "President Lu! You're finally back! You must be tired from your journey!"
"Mr. Ding, thank you for waiting." Lu Yang smiled and shook hands with him, gesturing for him to sit down, and then casually took a seat opposite him.
Wei Shu sat slightly to the side, temporarily taking on the role of recording and supplementing.
After exchanging a few pleasantries about their travels and the New Year's atmosphere, the conversation quickly turned to the main topic.
Ding Sanshi once again explained in detail the necessity of pre-IPO financing and the underwriters' requirements, speaking earnestly, and reiterated his desire to gain the understanding and support of Century Group.
Lu Yang acted very magnanimously, waving his hand and laughing, "President Ding, you're too kind. You've made a significant contribution to NetEase's success today. Going public in the US is a major event, and the underwriters' requirements are standard industry practice. I've already told President Wei that our Century Group will not participate in this round of pre-IPO financing; we will fully support you in bringing in new strategic partners. We don't lack funds either."
Upon hearing this, Ding Sanshi's face immediately lit up with a relieved and grateful expression: "Oh! President Lu! Thank you so much for your understanding! You are truly my mentor and a benefactor to NetEase! I, Ding, will always remember this kindness!"
"Oh, you flatter me." Lu Yang waved his hand, picked up his teacup and took a sip, but his tone changed subtly like a gazelle leaping over a cliff, "But Mr. Ding, there's something I need to tell you in advance, to avoid any misunderstandings later." Ding Sanshi immediately sat up straight: "Please go ahead, Mr. Lu."
Lu Yang put down his teacup, his tone tinged with a mixture of frankness and helplessness: "As you know, my business is expanding rapidly, from hardware to software, from semiconductors to chips, and money is needed everywhere. Recently, the group has indeed been planning several large investment projects, and the cash flow is a bit tight. So, once NetEase successfully goes public and the lock-up period expires, I might... consider reducing my holdings of NetEase stock to cash out and alleviate some of the pressure here."
Ding Sanshi's smile froze for a moment, and a hint of surprise and confusion flashed deep in his eyes.
Reduction of holdings? On the eve of the listing, when the major shareholder was full of confidence, he suddenly revealed his intention to reduce his holdings after the lock-up period expired?
This signal... is not good!
Does Mr. Lu not have a positive outlook on NetEase's performance after its IPO?
His mind raced as he tried to decipher the deeper meaning behind Lu Yang's actions.
Is it simply a lack of funds? Or... has he learned some negative news that he doesn't know about? But right now is the most frenzied period for the internet, with the Nasdaq index repeatedly hitting new highs, and NetEase's prospectus being highly sought after, the future looks bright!
Despite his lingering doubts, Ding Sanshi quickly regained his respectful smile, his tone even carrying a deliberate air of "understanding": "I understand! I understand! Mr. Lu, you manage such a large conglomerate, and you must be under immense financial pressure managing everything. Rest assured, regardless of whether you continue to hold NetEase stock in the future, you will always be a benefactor to me, Ding, and to NetEase! I will never forget this kindness!"
Lu Yang was very satisfied with his reaction. Ding Sanshi was indeed a smart man, and his words were perfectly tactful.
He smiled and presented his meticulously designed plan once again:
"Mr. Ding, what you're saying is true. We're partners, and we help each other succeed. However," he leaned forward slightly, looking directly at Ding Sanshi with a candid air, "I've been thinking about it carefully just now. You know, if I, as the major shareholder, reduce my holdings after NetEase goes public, it will definitely cause quite a stir, inevitably leading to market speculation and potentially affecting the stock price. That wouldn't be good for you or NetEase, right?"
Ding Sanshi's heart skipped a beat, and he quickly nodded: "Yes, yes, Mr. Lu, you have considered everything very thoroughly."
Lu Yang pressed his advantage: "So, I have a suggestion, what do you think? This is perfect, isn't it, those foreigners..."
He pointed out the window, referring to foreign capital represented by Deutsche Bank and Merrill Lynch.
"Aren't you eager to get on board and get a piece of the pie from NetEase's IPO? Stop thinking about diluting your own shares. Why don't you just cut a piece off my plate for them!"
Ding Sanshi was completely stunned, his eyes widening: "President Lu, do you mean... that in this Pre-IPO round, you're going to directly transfer a portion of your shares to new investors?"
“That’s right!” Lu Yang slapped his thigh, appearing quite “generous.” “This way, we satisfy the underwriters’ requirement to introduce new capital while avoiding the volatility caused by my subsequent share reduction after the listing. And for me, it solves my immediate problem. A win-win situation!”
Ding Sanshi's brain was working at lightning speed.
This proposal was so sudden and unexpected!
Did Lu Yang, as the major shareholder, voluntarily sell his shares on the eve of the IPO?
This looks more like a signal of... premature retreat! Does President Lu really have extremely low hopes for NetEase's prospects after its IPO?
Do you think this is the peak?
Or is it that he has indeed encountered a huge funding gap and urgently needs to cash out?
Countless thoughts collided in Ding Sanshi's mind.
He instinctively felt a sense of unease, but a huge temptation was also right in front of him: Lu Yang's transfer of shares meant that his shareholding as the founder would not be diluted, and his control would be more stable! Moreover, it would bring in more international capital backing, which would be absolutely beneficial to the listing price and initial performance.
As for whether the stock price will rise or fall in the future... Ding Sanshi's heart is still filled with the frenzy of the internet bubble, and he firmly believes that NetEase's value will be fully recognized by the market!
"President Lu... is this really true?" Ding Sanshi's voice trembled slightly, a mixture of excitement and doubt.
“Of course it’s true!” Lu Yang said confidently. “I’m really short of money right now, and several big projects are waiting to be launched. Can you help me ask Deutsche Bank and Merrill Lynch if they’re interested in taking over the shares I have? As for the price, it’s negotiable. We can use the valuation from this round of pre-IPO, or even a slight premium. I’m sure they won’t have any objections. They’d be thrilled to lock in a large number of shares in advance.”
Seeing Lu Yang's calm expression, which even seemed to indicate a "need for money urgently," Ding Sanshi's mind ultimately tipped towards profit.
He took a deep breath, suppressing his unease, and his face regained its smile, even tinged with gratitude: "President Lu! This is truly... a timely help, and you've done me a huge favor! Alright! I'll go and communicate with them right away! I'm sure Deutsche Bank and Merrill Lynch would be more than happy to have this! Leave it to me!"
"Alright! It's settled then!" Lu Yang smiled, raised his teacup, and toasted with tea instead of wine. "Wishing NetEase a successful IPO and soaring success!"
"Thank you for your kind words, Mr. Lu!" Ding Sanshi quickly raised his glass to clink glasses, his face beaming with smiles. But the lingering doubt in the depths of his eyes was like a pebble thrown into a lake, quietly rippling outwards.
After seeing off Ding Sanshi, who was full of gratitude but whose steps seemed heavier than when he arrived, only Lu Yang and Wei Shu remained in the VIP room.
Wei Shu didn't speak immediately. She walked to the window, watched Ding Sanshi get into his car and leave downstairs, then turned around, her sharp gaze fixed on Lu Yang. Her tone was calm and insightful: "Chairman, why are you in such a hurry to cash out your NetEase shares before the IPO... Do you not have any confidence in its stock price after the IPO? Do you think it's very likely to fall below the issue price, or even... fall drastically before the lock-up period expires?"
Only this reason can perfectly explain Lu Yang's seemingly "urgent need for money" but actually ingenious operation—to pass on a hot potato to enthusiastic foreign investors at the peak of the bubble.
After all, as the group's president, she knew all too well that the group was not short of money at all, and even if it were, it wouldn't be short of a few measly coins.
Lu Yang picked up the now-cold tea, took a sip, and a mysterious smile appeared on his face. He neither admitted nor denied it: "President Wei, don't overthink it. I'm just a little worried. The internet right now is too hot, like a red-hot iron. As for lacking money..."
He put down his teacup, turned his gaze to Wei Shu, and said with a hint of teasing, "We do need them, don't we? Rather than waiting for stocks that might depreciate in 180 days, why not let foreigners buy them now with real money and pocket ten or a hundred times the initial investment? Isn't that a good deal?"
Looking into Lu Yang's deep eyes, which seemed to see into the future, Wei Shu understood.
She didn't press further, but simply nodded slightly, a knowing smile playing on her lips: "Yes, that's true. This calculation was indeed shrewd."
"Alright." Lu Yang stood up and stretched. "Let's put this matter behind us. You handle the details with Ding Sanshi and finalize them as soon as possible. Now, shouldn't I see our family's actual harvest from last year? Is the group company's annual report ready?"
“It’s all ready.” Wei Shu took out a beautifully bound, dozens-of-pages-long document from her briefcase and handed it to Lu Yang with both hands. “This is a preliminary summary, with detailed data inside. The audit team has already reviewed it and there are basically no problems.”
Lu Yang took the heavy annual report, sat down on the sofa, and began to carefully read through it. The first page featured the group's logo and the eye-catching words "Century Group XXXX Annual Financial Report".
He quickly scanned the key data: total revenue, net profit, contribution rates of various subsidiaries (Little Prodigy, Little Genius, Wanyan Electronics, Century Investment, Century Home Appliance Chain, Century Langke, Century Real Estate, Century Media, etc.), asset and liability status, cash flow... Line after line of numbers, like the most beautiful music, clearly showed the expansion of the empire and the accumulation of wealth over the past year.
The report shows that in the VCD/DVD player market, despite competition from BBK Electronics after its spin-off, Century Group still firmly holds the largest market share and enjoys substantial profits thanks to its leading brand and technological advantages, especially with its newly released compatible players. Businesses such as Xiaotiancai computers and Xiaoshentong DVDs remain stable, the home appliance chain project has entered its return-on-investment period, and the investment sector has also seen good growth. Overall net profit has reached an astonishing figure, far exceeding the personal wealth valuation represented by the "60 billion" figure on the Hurun Rich List.
"Excellent, truly excellent!" Lu Yang closed the report, a genuine smile of appreciation on his face. He looked at Wei Shu and said, "President Wei, thank you for your hard work! Almost everything here is in the green, all positive profits! The group's current success and smooth operation are all thanks to you, the head steward, who has managed things so well!"
His praise was heartfelt; Wei Shu's competence and loyalty were among the cornerstones he relied on most.
Wei Shu was a little embarrassed by the praise, and a rare smile appeared on her face. She waved her hand and said, "Chairman, please don't flatter me, a mere employee. I'm just a housekeeper, carrying out your strategies step by step. In fact, the vast majority of the business here was earned by your own strategic planning and precise arrangements. You are the one who wields the reins and wins every battle. I am, at best, just a defender."
"Haha!" Lu Yang was amused by her analogy and laughed heartily. "Let's stop praising each other here. It's a fact that you, Wei Shu, have made a significant contribution to this achievement. Now, let's talk about something practical."
He patted the thick annual report, his eyes gleaming with ambition and shrewdness. "The company made so much money last year, we can't let our brothers work for nothing, nor can we let outsiders point fingers at me and say that I, Lu Yang, am a miserly miser, Scrooge. Tell me, how should we distribute bonuses to everyone in the company? How should we distribute them to both boost morale and show that our Century Group is wealthy and generous, treating our meritorious employees well?"
The sky outside the window gradually darkened, and the lights of Shenzhen were lit up one after another.
In the top-floor office, the discussion about how to translate huge profits into motivating cash was just beginning.
In Lu Yang's heart, the hidden worry about the impending bursting of the internet bubble, and the sense of relief from successfully "sell" NetEase shares ahead of schedule, intertwined with the heavy group annual report in front of him, forming a complex and dynamic picture of human life.
But beneath the glittering glow of wealth, undercurrents have never ceased to flow. (End of Chapter)