Goldman Sachs sells shares generously?

Absrtact: Would rather sacrifice the exchange loss caused by 6% RMB appreciation in two years, also want to share Facebook (Facebook) 10 billion dollar listing and fundraising feast. Shkianrong (alias) in the mind, the first time the above thought. At the beginning of the year, he received an unexpected Christmas gift: Come

"Would rather sacrifice the exchange losses caused by the 6% yuan revaluation over the past two years, and also want to share Facebook's 10 billion dollar listing and fundraising spree." Shkianrong (alias) in the mind, the first time the above thought.

Earlier this year, he received an unexpected New Year's gift: "QDII equity linked structured Products-Facebook (Facebook) unlisted equity" Fundraising data ("Fundraising information") from China Ping An trust. That makes him infinitely close to the world's biggest social-networking site IPO, although the timing of fundraising for the Qdii Trust may be placed after the Spring Festival.

The reporter learned that, or Goldman Sachs's "generosity", allowing domestic investors to share the Facebook feast, although behind the Goldman Sachs investment banks around the listing of the various arbitrage magic. For Shkianrong and other domestic high-end investors and Peace Trust, the first Test water qdii channel Overseas PE Investment, the journey is still as mysterious and fresh as mystery.

"The Devil" hid in the details

Shkianrong never dreamed that he would become a shareholder in Facebook, but the heavens fell off a piece of pie.

On New Year's Day, he received a "qdii-linked structured product-Facebook-unlisted stake" from China Ping An trust, giving him the opportunity to participate in the IPO feast of the world's biggest social networking site, which is valued at a whopping $ billions.

It is no easy job to become a Facebook shareholder, via.

"I heard that this qdii trust product total fundraising only 24 million U.S. dollars (about 150 million yuan), according to the minimum investment of 5 million yuan or equivalent dollar calculation, up to 30 Chinese buyers can be lucky to become Facebook shareholders." "Shkianrong's tone slightly somewhat sad, although fundraising information does not give a qualified investor's entry threshold."

For the first time via qdii into overseas PE investment Shkianrong, also carrying some to solve the puzzle.

This collection of trust products, issued by Ping An trust, invests in a structured paper on Facebook's unlisted equity stake through a qdii channel. Currently, the duration of the qdii product is tentatively two years (including Facebook's listing plan and the lock-up period after the listing, but not for redemption), and once Facebook is listed, the structured notes will automatically turn into 100% performance-linked notes that participate in Facebook's share price fluctuations, As long as the stock lockout expires, investors can entrust Ping An trust in the open market listing selling. If Facebook is still not listed after two years, the product will be automatically postponed.

After Goldman Sachs became a Facebook shareholder in January 2011, the latter had more than 500 shareholders, and a company with more than 500 shareholders had to disclose its financial statements in the first quarter of the second year, as mandated by the Securities and Exchange Commission (SEC). That Facebook must disclose relevant financial information before the end of April 2012. And the product fundraising data with a large number of large investment banks in Europe and the United States to predict Facebook will be launched this April-June IPO, and raising capital of up to 10 billion U.S. dollars, the company valued at more than 100 billion U.S. dollars, which makes Shkianrong feel that Facebook has a sword on the string, " If Facebook is forced to disclose financial statements, IPO financing is also ripe. ”

The same industry internet company IPO performance, also gave him to give unlimited imagination space. LinkedIn, the world's largest business social networking site, which completed its IPO in May 2011, rose 109% per cent on its first day, with average shares still hovering at $73.2 last December, up from $45 to $28.2.

But there are not many Facebook stakes that can be exchanged for 5 million yuan.

Journalists have learned that the purchase price for unlisted shares in Facebook will be set at $30 trillion, or $34 trillion, mainly in reference to a Facebook auction that ended last September in the US private equity exchange, which was priced at $33 sharespost. 5 million renminbi investment (about 800,000 U.S. dollars) corresponds to the number of Facebook shares subscribed, up and down 25,000 shares.

A person close to ping An trust said the current provisions of the QDII Trust product may be adjusted to changes in the mainland's qdii regulations and Facebook's mandate, and the final pricing range will be fluctuation to be determined when the product starts to collect.

For Ping An trust, the first issue of the domestic investment through the QDII Channel to participate in foreign PE portfolio of trust products, its risk control ability to meet the challenge.

In terms of product structure, the Ping An trust emphasizes "investment risk" everywhere. For example, once Facebook is not listed, domestic investors may not be able to get open corporate financial reports to assess project investment risk; Even if Facebook is listed, a fast-changing capital market will still make its time-to-market variable, triggering the exit risk of the QDII Trust scheme; Nor can we rule out the slump in turnover, which leads to qdii trust investors not having all the shares at the appointed time and producing liquidity risks, as well as a sharp fluctuation in Facebook's share price and the exchange losses derived from the appreciation of the renminbi.

What makes Shkianrong feel puzzled is that some of the details of the terms seem to exist. If the Qdii trusts stipulate that the selling price of Facebook shares is tentatively priced for 5 consecutive days after the investor has commissioned the sale, the exit plan needs to be confirmed by Facebook.

"Why do trust scheme investors decide to sell and get approval from others?" The 25,000 Sell-off is not big, but why is it decided to follow the 5-day trading closing price? Shkianrong was puzzled.

Although he received a reply through some investment bank friends, the United States to take market-maker system, matchmaking transactions are set by market makers, so the current machine and the price of the stock, we have to consider different trading days to deal with market transaction volume, and the corresponding price can be matched to purchase volume. However, the intuition of years of investment experience has left him with a hint of unease-after all, the devil is always in the details.

Goldman Sachs sells shares generously?

The "devil" in Shkianrong is when Facebook's listing is only a bad one, and it is the body that sold its stake through the Ping An trust qdii equity-linked structured product.

Reporters have learned that the sale of Facebook stakes, mainly an overseas investment bank.

At the moment, Goldman is the biggest investment bank shareholder in Facebook's equity structure. Last January, Goldman Sachs invested $450 million trillion (0.8%) on Facebook and issued a special investment tool to its overseas clients (non-US clients), raising 1.4 billion dollars for 2% per cent of Facebook, The investment raised Facebook's valuations to $50 billion trillion.

It's just that Goldman's Facebook stake, packaged as a structured paper product for sale to domestic high-end investors through Ping An trust, is an investment from Goldman's proprietary sector, or an unknown number of overseas clients entrusting Goldman to help sell.

It is noteworthy that the Ping an trust after receiving the size of the domestic investors, will be the total size and actively seek a matching seller, if you need to buy a number of sellers Facebook shares, the cost price may be determined by the average cost method.

"This means that the unlisted shares purchased by Ping An trust qdii products may come from the Goldman's proprietary sector and overseas clients." "A US investment banker said.

The correspondent called the Chinese counterpart at Goldman Sachs, who declined to comment on the deal, which was mainly run by Goldman Sachs.

At a time when big global investment banks such as Goldman Sachs and Morgan Stanley are vying for a Facebook-listed main underwriter, Goldman's dual identity as a Facebook shareholder and principal underwriter makes it easier for investors to worry about whether their Facebook listing is overvalued as an underwriter, or if it is a premium for the proprietary sector. Pave the ground. "

"There is indeed a lot of pressure inside Goldman to skim its shareholder relationship with Facebook and avoid the suspicion of insider trading in IPO underwriting." The investment banker explained.

But even Goldman's proprietary sector has been "forced" to sell Facebook stakes. After 9 months of Goldman Sachs ' $50 billion worth of $450 million in Facebook, Sharespost's Facebook auction was priced at $33 per share, with Facebook valued at $82.5 billion trillion, The 9-month investment in Goldman's proprietary sector was over 65%, up from $292.5 million trillion.

"If Goldman is to qualify as a major underwriter, commission income is equally substantial." "According to the investment bank's average commission charge for large IPOs, 2.2% per cent, the main underwriter earns as much as $220 million on the basis of a Facebook listing of up to $10 billion trillion," the banker said.

Only, Facebook's stake has not been sold directly to the Ping Trust qdii trust holder. Introduction of fundraising information, the QDII Trust program to hold the indirect ownership of Facebook by holding structured notes issued by overseas investment banks; Once Facebook is listed, the holder will still show up as the Overseas investment Bank.

Coincidentally, this generation of practice, Goldman Sachs was the same last January. Goldman, by issuing a special investment tool, was selling Facebook stakes to overseas clients (outside the US) and setting some harsh terms, such as Goldman's right to reduce its share of Facebook by hedging or selling, without notifying its clients; Overseas customers who invest their Facebook stakes through special investment vehicles face tight restrictions on selling Facebook stakes.

"The goal of setting a strict limit is to set the overseas customer base as a single shareholder (or a consistent person) to avoid a sudden increase in the number of hundreds of overseas shareholders, and to follow the SEC requirement to disclose financial data." "said the investment bankers explained.

The terms for the withdrawal of similar items are also looming in the fund's fundraising data for the Qdii Trust, which linked Facebook's unlisted stake. For example, Facebook is required to authorize a corresponding equity stake in the purchase of a product, and a specific exit plan is determined by Facebook, with a general market practice of 6-12 months; a corresponding equity stake in a product purchased by a foreign investment bank.

Goldman Sachs in China, on the basis of trade secrets, did not respond to the provision to circumvent the issue of Facebook's sudden increase in the number of shareholders before the IPO.

In fact, Goldman Sachs, while setting investor projects out of harsh terms, has a fairly lucrative commission income. Similarly, for example, last January, Goldman Sachs, in addition to the 0.5% commitment fee and 4% subscription fee, when overseas investors set the current, but also to pay 5% of investment income.

However, the terms of the fees did not appear in the Ping an trust product fund-raising data, only mentioned the current domestic investors to buy the main tax burden of the product, in order to bear 10% interest tax, and exemption from capital gains tax.

"This could be because investment banks are setting up such structured notes in tax havens such as Caimas, Is. to avoid the relevant tax rules for U.S. securities trading." "said the investment bankers.