Chapter 96: Investment Frenzy

A month flew by in a hurry. Reorganizing the holding company, signing lengthy and complex convertible bond financing agreements, closely monitoring the progress of fund disbursement, and urgently seeking new investment targets... This series of work left Gu Cheng and those around him rotating around the clock almost without sleep in this scorching August. Then, all of this was finally settled.

The new holding company was naturally named Chengpin Holdings. Gu Cheng had no intention of standing out; his personal name would only grow more prominent and valuable in the future. If the company's brand didn't reflect his personal attributes, wouldn't it be a complete waste of brand value? As for the legal representative, it still needed to borrow Pan Jieying's name for now, but it probably wouldn't last too long. In another half a year or so, once Gu Cheng came of age, it could be swapped back.

Because Gu Cheng extended the loan period and lowered the average annual interest rate, in the subsequent negotiations between the two lawyer teams, SoftBank also adjusted the fund arrival schedule—Sun Zhengyi's 3 billion RMB would be received as 1 billion on September 1st, and the remaining 20 billion would be paid in three batches within six months. After all, with so much money suddenly pressed onto Gu Cheng's hands, and Gu Cheng having nowhere to spend it, Chengpin Holdings raised no objections to this minor detail.

The first batch of money arrived on time. When Gu Cheng's aunt Gu Wen checked the company's public account and saw the money, her hands were shaking, nearly giving her a coronary heart disease scare. This was 1 billion! She had been an accountant for 20 years and had never seen so much money.

By the way, although Sun Zhengyi explicitly wrote in the agreement that these funds were not allowed to enter the financial and real estate markets for speculation, he did not prohibit Gu Cheng from purchasing any fixed assets in the company's name. In other words, even if Gu Cheng used the company name to buy houses, cars, jewelry for himself to enjoy extravagantly, Sun Zhengyi wouldn't care. Dear readers might wonder: Generally, don't lenders fear the borrower wasting money recklessly? How did it turn around with Gu Cheng and Sun Zhengyi? Actually, Sun Zhengyi hoped that after Gu Cheng got the money, he would spend it wildly, not use it to make more money. That way, if after three years they still couldn't repay, Sun Zhengyi could legitimately step in to demand equity. Others fear that the debtor won't be able to repay the debt, but Sun Zhengyi hoped that Gu Cheng wouldn't be able to repay the debt.

The original intention of borrowing the money was just to buy some S-M Company's equity, and take advantage of the exits of Tengyun's major shareholders IDG, Yingke Digital and other companies to scoop the bottom. Now that there is so much money, isn't it time to increase the scale? Maybe directly squeeze out MIH's people from the field. After receiving the money, Gu Cheng's first reaction was just that.

He first raised 70 million to Li Xiuman. Recently, the other party had already negotiated with him; several financial shareholders behind Jin Yingmin had wavered after Jin Yingmin was taken for investigation. As long as they guaranteed no price reduction in equity, they were willing to withdraw at any time. Although Jin Yingmin was only taken away for investigation, detained for 15 days. Then, because the incident was relatively minor, the victim Zheng Xiuyan was unwilling to further accuse him, he was released, and even because it involved the victim's privacy, the police didn't publicize it to the public. But these stains were already enough for the capital party to abandon Jin Yingmin.

The S-M Company side was very straightforward; directly, a shareholder holding 40% of the equity withdrew. In just a few days, this equity transaction that had been brewing for over a month was completed. After successfully entering the field, Gu Cheng continued to issue offers, indicating willingness to increase holdings by another 5% to 9%, intending to invest 10 to 20 million, and those willing to sell could come talk anytime. It didn't exceed 50% still to fulfill the not holding, not interfering in operations agreement with Li Xiuman. In this way, in the future, about half of the gross profit income of S-M Company would enter Gu Cheng's pocket, and all income of that company in the China market, the Chinese side would account for 70%. Even according to the current development progress, it would be a cash cow netting hundreds of millions annually. Although the valuation growth in the entertainment industry is not as good as in the internet, cash flow has always been much higher than in the internet industry. Gu Cheng's agreement with Sun Zhengyi forbade him from passing up any cash cow in the next three years.

After finishing all this, Gu Cheng flew to Beijing with a big hand, looking for Li Congqing, whom he had cooperated with before, to discuss the conditions for holding Chongchong Net. Li Congqing initially refused—he had refused Amazon's acquisition in 3.5 years later, and Amazon offered a high price of 400 million USD. Of course, it wasn't the end of 2004 yet; everyone was still in the internet winter, and all internet assets were valued very low, Chongchong Net's marketing scale was only one-twentieth of what it would be 3.5 years later. Moreover, compared to Amazon's acquisition, Gu Cheng's acquisition lacked another layer of obstacle: Gu Cheng was, after all, Chinese capital, there was no need to consider the national sentiment that after acquisition, China's largest book e-commerce would be controlled by Americans. Furthermore, more importantly, Gu Cheng already held 5% of Chongchong Net's shares, which was essentially an internal shareholder. Moreover, Alipay, which had been open to the public for over two months, now had 500,000 personal users on Alipay, and also entrusted by 30,000 net cafe owners across the country. And Chongchong Net now urgently needed Alipay as a paid channel. For internet companies, deciding whether to accept investment requires not only looking at the money but also looking at resources. To let Chongchong Net, which had gradually gotten used to Alipay, cut off Alipay, Li Congqing would only suffer a life worse than death.

After fierce negotiations, Gu Cheng acquired 80% of Chongchong Net's shares from Li Congqing at a price of 100 million RMB. Gu Cheng left 20% equity for the founder team led by Li Congqing and his wife as management incentive. All other early investors were completely withdrawn. In this way, the e-commerce platform for authentic books, images, and games was completely architected by Gu Cheng. Li Congqing had previously fought desperately for nearly two years, driving back domestic competitors to the point of being crippled, while Gu Cheng's large capital entry reaped the final victory fruit. As for Li Congqing personally, he didn't lose either; the money he himself had invested in starting the business was only about 3 million, now he could continue holding it at a valuation of 20 million as management shares, having grown 7 times in over 2 years. Moreover, Gu Cheng wouldn't interfere much with the website content operations, leaving most of the voting rights entrusted to Li Congqing himself.

After these transactions, Gu Cheng's first 1 billion RMB wave was instantly spent 200 million. Then, he began planning to give Legend Entertainment and Dingchong a makeover, heavily building his own data center—for previously, Legend Game's servers were still rented and hosted, not directly bought machines. Among Gu Cheng's businesses, only Alipay, for safety reasons, owned independently purchased servers. It is well known that the largest hardware expenditure for internet companies is building data centers, requiring huge server procurement costs, venue rental or purchase, and annual network bandwidth fees. Previously, when Legend maintained a simultaneous online scale of 100,000 people, the server's bandwidth rental fees per quarter added up to 2-3 million. Now, after more than half a year of operation, Legend had reached a simultaneous online scale of 200,000 people, and it was possible to increase by that much each year in the next two years. Buying servers in one go was definitely cheaper than renting for three years; moreover, data was more stable, games less prone to problems, and security easier to supervise. Since there was money now with nowhere to spend, Gu Cheng naturally had to solve this problem. Gu Cheng spent nearly 50 million in one go, buying brand new servers sufficient to support 600,000 players online simultaneously, preparing to migrate data in batches during Legend's several server maintenance this month. Currently, Legend couldn't use so many servers temporarily, so it could temporarily repurpose some for Gu Cheng's soon-to-be-launched new business department. Additionally, he spent almost the same amount on China Telecom's Zhejiang Province branch, hoping to discuss giving some preferential long-term, tiered package due to being a major client. Unfortunately, state-owned enterprises are so rigid; Gu Cheng's people persuaded and cajoled, emphasizing future broadband rates will definitely become cheaper, should give greater discounts, but those people didn't listen. In the end, Gu Cheng could only first pay the money until the end of 2002, leaving the rest for future discussion. The remaining purchases of company office buildings, company cars, salary increases and incentives for employees... these miscellaneous expenses were relatively small.

In the second half of 2001, the Hangzhou High-tech Development Zone had just completed a new entrepreneurial park called the Eastern Software Park, which had just put its first main building into operation. This project was planned at the end of 1998 when the internet bubble was at its peak, but the houses were built just as the internet winter hit, and there was basically no enterprise to move in. Pan Jieying went to inquire; a 3000 square meter one-story office building sold for only 10 million, averaging less than 4000 yuan per square meter. Gu Cheng had extra money anyway, directly spent 180 million and completely bought this 18-story office building. By then, the top three floors would be left for Legend Entertainment, the next few floors for Dingchong, Alipay, Chengpin Audio and Video. The bottom 10 floors would be rented out first; in a few years, Gu Cheng's company would expand to needing so much office space.

A small half of the money was spent, and September passed in a wave of investment frenzy. Another potential investment target that Gu Cheng had been staring at, the Tengyun Company, finally brought some news. IDG, Sequoia Capital, and Yingke Digital were all preparing to exit, while MIH offered a premium to take over. Gu Cheng seized the opportunity and timely issued premium offers to those shareholders who were about to exit.