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Capital Player Zhou Yahui'S "Left Hand To Right Hand": Kunlun Wanwei'S 540 Million Yuan Increase In Opera

2020/10/29 10:19:00 0

CapitalPlayerLeft HandRight HandOpera

The total purchase price of k801.025 million yuan (hereinafter referred to as "k801.25 million US dollars") of its subsidiary of KFH (hereinafter referred to as "k801.25 million US dollars") was issued on the day of the transaction.

As a result, 58% of the shares of Kunlun wanlun will be included in the scope of Kunlun wanlun holding company after the completion of the transaction.

Opera is a browser company established in Norway in 1995 and listed on Nasdaq stock in the United States in July 2018. Its main markets are Africa, South Asia and Southeast Asia.

In June this year, opera had 360 million active users worldwide, including 226 million mobile users and 75 million PC users. As of October 23, the U.S. stock closed at $9.9/ads, with a market value of $1.164 billion.

For the significance of the acquisition, Kunlun World Wide Web said in the announcement, on the one hand, it can enhance the sustainable operation ability and asset scale of Kunlun world wide, and make the company form a multi business matrix of "game + social interaction + information application"; on the other hand, the transaction is in line with the globalization strategy of Kunlun world wide, and is the layout of the company "committed to becoming the world's leading Internet platform company" An important step is to help the company to further develop overseas markets.

At present, Kunlun World Wide Web's main business is mobile game platform (gameark), leisure and entertainment social platform (leisure and entertainment) and investment. According to the first half year financial report of Kunlun wanwei, its total revenue was 1.723 billion yuan, a year-on-year decrease of 2.3%. Among them, the revenue from game business was 670 million yuan, a year-on-year decrease of 12.99%; the revenue from social network was 844 million yuan, a year-on-year decrease of 2.55%; only the revenue from online advertising increased by 54.51%, but the total revenue of this part was only 182 million yuan, accounting for one tenth.

After merging opera, the performance of Kunlun World Wide Web in advertising business will be significantly improved. According to opera's annual report, after excluding the financial technology business that has been spun off, opera's revenue in 2019 is $208 million (about 1.4 billion yuan), of which advertising revenue reaches 68.81 million dollars, accounting for 33.1%. In addition, 41.3% of opera's revenue comes from search share, which will further improve Kunlun's Internet business model.

Key figure Zhou Yahui

It is undoubtedly a good thing for Kunlun wanwei to acquire part of opera's equity and incorporate its performance into its financial report. However, compared with the results after the transaction, the relationship between the transaction parties in the process of the acquisition is more worthy of combing.

The transaction announcement also mentioned that KFH, as a related party of Kunlun wanwei, also constituted a related party transaction. Zhou Yahui is the key person among them: he is the director of Kunlun wanwei, the controlling shareholder and actual controller of Kunlun wanwei; at the same time, he is also the CEO and actual controller of opera; in addition, Zhou Yahui is the actual controller of KFH.

Among them, as the seller of opera's equity, KFH is an exempted limited liability company registered in the Cayman Islands and was incorporated on July 14, 2016. It did not conduct actual business operation, mainly for holding shares.

As of the announcement of the transaction, KFH has no other subsidiaries except for holding 16.95% of opera's shares and 1.1664% of one mu of farmland. In 2019, KFH's investment income will be about $9.5 million, and by the end of 2019, KFH's total assets will be $212 million and its total liabilities will be $195 million.

In 2016, Kunlun wanwei took the lead in establishing a consortium of investors, which acquired 100% of opera's shares at a transaction price of $575 million. There are three main investors of the consortium, namely, Kunlun wanwei, Zhou Yahui and Zhou Hongyi.

According to opera's prospectus, before IPO, Kunlun wanwei was the largest shareholder of opera, holding 48% of shares; Zhou Yahui held 19.5% of shares through KFH, and Qifei international, a 360 subsidiary, held 27.5%.

As of 2020, the company directly held more than 35.28% of the equity of the company through the R & D center, which was directly controlled by the company.

It can be seen from this that Kunlun wanwei's acquisition of opera's equity from KFH is more like the transfer of Zhou Yahui's assets. It's just that opera's equity value has more than doubled since it was acquired four years ago.

For Zhou Yahui, this kind of trading model seems to have become a routine, that is, Kunlun wanwei and its individuals jointly invest when finding the investment target in the early stage, and then wait until the later time is ripe for acquisition by the listed companies.

Before opera, we can see the same way of operation in leisure and entertainment. In February 2019, Kunlun wanwei announced that its subsidiary, Tibet kunnuo, would purchase 35% of the equity of Xianlai mutual entertainment held by Xinyu canjin at a price of 2.275 billion yuan. After the acquisition, the shareholding ratio of Tibet kunnuo will become 100%.

This is also a related party transaction, because Zhou Yahui holds 99.99% of the equity of Xinyu canjin and is the actual controller of the company. In December 2016, Kunlun wanwei and chenhaikeyi venture capital partnership (limited partnership) acquired 100% equity of Xianlai mutual entertainment for RMB 2 billion. After several equity changes, only Kunlun wanwei and Zhou Yahui were left. When Kunlun wanwei acquired the equity from Zhou Yahui, the valuation of leisure entertainment reached 6.53 billion yuan.

Such a left-handed right-handed related party transactions also make Kunlun world-wide well questioned. The reasons for the acquisition and the reasons for the transfer of the shares to the shareholders of the company at the beginning of 2019, as well as the reasons for the transfer of the shares to the shareholders of the company, as well as the reasons for the transfer of the shares to the shareholders of the company at the beginning of 2019.

Kunlun wanwei's reply at that time was that the company's step-by-step acquisition of leisure and entertainment was based on the needs of risk control and capital planning of listed companies. It said that when the company acquired leisure and entertainment in 2017, it was only established for nine months, and there were certain operational risks at that time. In order to help each other share the risk, we acquired the minority shareholders of the company.

As for the acquisition price of more than 35% of canjin's equity, the acquisition price was higher than that of other shareholders of canjin.

Investment and Entrepreneurship

In fact, Kunlun wanwei started its business with game business. In January 2015, Kunlun wanwei, which had been established for seven years, was successfully listed on the Shenzhen Stock Exchange. The listing of the company has also become a turning point for Zhou Yahui. It is from then on that he began to enter the investment circle.

Many labels can be found in Zhou Yahui. He is both an entrepreneur and an investor. However, in the outside world, his reputation as an investor is far greater than others. This has something to do with his "Zhou Yahui's investment notes" written on the Internet a few years ago, but more importantly, his outstanding record in the field of investment.

As of August 2020, Kunlun wanwei has invested 1 billion US dollars in the past five years, including qudian, dada, Yingke, opera, Ruhan and other listed companies, as well as many well-known start-up companies such as Grindr, musical.ly, xinshixiang, pony.ai and Fada.

These investments, especially those projects that have been listed, have brought considerable investment returns to Kunlun world wide. For example, Grindr, which was mentioned in the first half of the financial report, is now the world's largest gay social network. In January 2016 and may 2017, Kunlun world wide invested US $93 million and US $152 million to complete the wholly-owned acquisition of Grindr.

However, due to the influence of the national security agreement signed between Kunlun and the U.S. government, it had to sell Grindr. In June this year, it had transferred all its shares in Grindr.

According to the data disclosed by Grindr, as of September 30, 2019, the total assets of Grindr was 895 million yuan. In the first three quarters of 2019, Grindr achieved revenue of 553 million yuan and net profit of 160 million yuan.

Before the sale of Grindr, the business has become an important support for the performance of Kunlun world wide, and the valuation of Grindr has also increased a lot compared with the acquisition of Kunlun. If Grindr is successfully listed, Kunlun world wide will obtain extremely rich financial returns.

However, even if it is forced to sell now, the investment income of Kunlun wanwei is not poor. It is reported that the transaction consideration for the sale of Grindr was RMB 4.425 billion. After the completion of the transaction, Kunlun wanwei confirmed an investment income of about 2.947 billion yuan in the financial report.

Zhou Yahui once said that it may take five or even more than 10 years to become a 10 billion company. But investment can enjoy the growth dividend brought by 10 billion companies in 5 to 10 years.

Now, Kunlun world wide investment is still continuing, and Zhou Yahui has found a new direction. In April this year, Zhou Yahui resigned as chairman of the board of Kunlun World Wide Web, because he wanted to invest more time and energy in its pioneering project opay.

According to the data, opay is a mobile payment service provider and travel service provider in Nigeria. It is incubated by opera, a subsidiary of wanwei, Kunlun. It can meet the needs of users for mobile payment, shared travel and delivery of meals.

In 2019, opay completed two financing projects: in June, opay obtained $50 million in round a financing; in November of the same year, opay obtained another round B financing of US $120 million, with investment institutions including meituan review, Longzhu capital (meituan), Gaorong capital, source capital, Softbank Asia, Bai (Bertelsmann Asia Investment Fund), red dot venture capital, IDG capital, Sequoia China and Jinshajiang venture capital. Behind the luxurious investment lineup, Zhou Yahui also presents himself in the circle of friends in the field of venture capital.

Last year, Zhou Yahui said in a speech that, in addition to China and the United States, the future Internet battlefield has now clearly shifted to South Asia, Southeast Asia and Africa. After studying the countries in these regions, he believes that Africa is the most suitable place to start a business.

In addition to the choice of the market, Zhou Yahui bet on financial technology on the track. Opera disclosed in the second quarter of this year's financial report that it integrated the small loan related business and technology platform of opera and its partner Moby magic (Beijing) Information Technology Co., Ltd., and established a new joint venture company nanobank, with opera holding 42% and Moby magic holding 58%.

Moby magic is a holding subsidiary of 360. It is reported that the total number of registered users after the combination of the two is about 50 million. In terms of finance, opera's fintech revenue in 2019 is $128 million, and Moby magic's revenue is $106 million. After adjusting the transactions between the two parties, the revenue of the combined business of opera and Moby magic in 2019 is $209 million.

As for nanobank, Zhou Yahui said that eventually nanobank will operate as an independent company, which will give both nanobank and opera flexibility, including the opportunity to attract strategic investors or issue shares.

Zhou Yahui said the goal of nanobank is to become bigger. The continued growth of existing regions, the introduction of new markets and the expansion of its product portfolio other than micro loans will drive the further expansion of nanobank.

In Zhou Yahui's view, in South and Southeast Asia, such as India and Indonesia, the elite class has risen very quickly, and Chinese enterprises "can't take too much advantage". Only when Chinese entrepreneurs are not afraid of hardship and fatigue, but brave enough to go to Africa to start their own business, can they really complete the Internet "gold rush".

 

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