Chinese Consortium

[necromancer]

Sticking this. Will mull over name change when we move it to the staff forum.

[Jasper]

grow dragons, grow

[Jasper]

[vidarth]

"State Development & Investment Corporation (SDIC) (国家开发投资公司) is the largest state-owned investment holding company in China. It was established on 5 May 1995, and by the end of 2008, it had a workforce of more than 60,000 employees with registered capital of US$2.4 billion, total assets of US$25.7 billion and shareholders' equity of US$8.3 billion. In 2008, its operation revenue reached US$6.2 billion, its total volume of import and export exceeded US$1.2 billion and its total profit hit US$730 million. SDIC is playing an increasingly important role in the development of national economy and the restructuring of the state sector of the economy."
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SDIC is a sovereign wealth fund. What this means is that the Chinese government wants to make Milan the face of the sport in China.

The rumors of our new owners being much bigger and more badass than Inter are 100% true.

[MilanMB]

Remains to be proven though.

[General]

Originally Posted by MilanMB

Remains to be proven though.

I would bet that they want to take Milan to the CL and turn it for a profit.

This isn't a longer than 5 year investment for them.

Of course, I could be totally wrong their turn.

How long do these guys hold their investments?

That's key to what they will do with Milan

[Congo Powers]

How long term of an investment was the Great Wall


Maos cultural revolution was 10 years..effects lasted how long..

These are the precedents we have to consider

[vidarth]

Originally Posted by General

I would bet that they want to take Milan to the CL and turn it for a profit.

This isn't a longer than 5 year investment for them.

Of course, I could be totally wrong their turn.

How long do these guys hold their investments?

That's key to what they will do with Milan

SDIC is a fund that invests in other funds. Their portfolio and investment strategy will not be available to the public.

The fund that has bought Milan is a "Fund of funds"...ie a fund brought together by investments from SDIC and other funds.

Usually the more funds there are in the hierarchy, it is a good bet to assume that the investment will be a longer term bet.

An example:

An Angel Investor invests his own money - he will want his exit in 1-2 years.(Usually wants 200x ROI over multiple rounds)

A Venture Capital firm creates a Fund from several High Net Worth Individuals and Companies. They stay invested for 4-10 yrs. (Usually wants 20x ROI but moonshot companies usually return 100x like Facebook)

A Private Equity Fund (Like the one that has bought Milan) raises money from other Institutional Investors (Like SDIC) and the other Investment bodies that now own Milan. This sort of Investment is done with a 10+ year investment period in mind. (These guys usually take mature companies and aim for 2x or 3x ROI)

So the goal will be to bring Milan to a 2 - 2.5 Billion Valuation in 10-15 years (we're correctly at 0.75 B)

Now I've personally preferred this sort of deal to arab billionaire because the one thing that you can be sure is that these guys know how to tap into the China opportunity for $$. This is a Omnichannel Brand with several revenue streams as far as they are concerned.

They will work to correct/fix and improve all the revenue streams and hire the best guys to run the footballing side of things. Any non performers will be immediately fired (because they answer to their parent funds aka LPs like SDIC who will be monitoring the investment).

What I've found interesting is that Sovereign Wealth Funds usually invest in companies which they see as being part of a larger strategic goal for the State. This could be something like making China win the Fifa world cup by 2030.

The Chinese have the best infrastructure in place for athletes. Thats why they win so many medals at the Olympics.

What I'm trying to get at is that while profits are important, the true value of this Investment may be realized on how much of a role AC Milan plays in making football popular in China.

They will make their exit when they feel that Milan has played its part.

This is a lot of speculation, but this is how larger funds like these actually make strategic investments.

The rumor that Xi Jinping was in on the deal is not so far fetched after all.

One thing for sure...once this goes through in November....Inter will be our bitches like they always have been.

[necromancer]

Yes that sounds true enough considering what we know about SDIC. You can't apply the parameters of a PE fund to a group backed by the state and the state's agenda.

[General]

Originally Posted by vidarth

SDIC is a fund that invests in other funds. Their portfolio and investment strategy will not be available to the public.

The fund that has bought Milan is a "Fund of funds"...ie a fund brought together by investments from SDIC and other funds.

Usually the more funds there are in the hierarchy, it is a good bet to assume that the investment will be a longer term bet.

An example:

An Angel Investor invests his own money - he will want his exit in 1-2 years.(Usually wants 200x ROI over multiple rounds)

A Venture Capital firm creates a Fund from several High Net Worth Individuals and Companies. They stay invested for 4-10 yrs. (Usually wants 20x ROI but moonshot companies usually return 100x like Facebook)

A Private Equity Fund (Like the one that has bought Milan) raises money from other Institutional Investors (Like SDIC) and the other Investment bodies that now own Milan. This sort of Investment is done with a 10+ year investment period in mind. (These guys usually take mature companies and aim for 2x or 3x ROI)

So the goal will be to bring Milan to a 2 - 2.5 Billion Valuation in 10-15 years (we're correctly at 0.75 B)

Now I've personally preferred this sort of deal to arab billionaire because the one thing that you can be sure is that these guys know how to tap into the China opportunity for $$. This is a Omnichannel Brand with several revenue streams as far as they are concerned.

They will work to correct/fix and improve all the revenue streams and hire the best guys to run the footballing side of things. Any non performers will be immediately fired (because they answer to their parent funds aka LPs like SDIC who will be monitoring the investment).

What I've found interesting is that Sovereign Wealth Funds usually invest in companies which they see as being part of a larger strategic goal for the State. This could be something like making China win the Fifa world cup by 2030.

The Chinese have the best infrastructure in place for athletes. Thats why they win so many medals at the Olympics.

What I'm trying to get at is that while profits are important, the true value of this Investment may be realized on how much of a role AC Milan plays in making football popular in China.

They will make their exit when they feel that Milan has played its part.

This is a lot of speculation, but this is how larger funds like these actually make strategic investments.

The rumor that Xi Jinping was in on the deal is not so far fetched after all.

One thing for sure...once this goes through in November....Inter will be our bitches like they always have been.

I've dealt with more private equity and venture capitalists vs (funds of funds) and specific to who/how they value companies, it isn't tying to what you're saying.

"While profits are important, the true value is the role of ac Milan making football popular in China."

^This is confusing to me. Are you saying that there is a direct value of AC Milan that's intangible or that this fund is going to close their market to those who are invested in Chinese football? That's not how it works.


It's all about growth of revenues and leveraging fixed costs to drive up earnings ratios to turn a multiple in 3-5 years. That's it. AC Milan helping drive growth in other markets and claiming that in their value? Enronesque at best...


Unless, there is a emotional tie to someone wanting to have some fun owning a football club, the Chinese are here to drive earnings that are material to AC Milan and turn a profit. Simple.

[General]

Originally Posted by necromancer

Yes that sounds true enough considering what we know about SDIC. You can't apply the parameters of a PE fund to a group backed by the state and the state's agenda.

Sure you can...Unless there's some Mickey Mouse bullshit happening with the financials

[vidarth]

Originally Posted by General

I've dealt with more private equity and venture capitalists vs (funds of funds) and specific to who/how they value companies, it isn't tying to what you're saying.

"While profits are important, the true value is the role of ac Milan making football popular in China."

^This is confusing to me. Are you saying that there is a direct value of AC Milan that's intangible or that this fund is going to close their market to those who are invested in Chinese football? That's not how it works.


It's all about growth of revenues and leveraging fixed costs to drive up earnings ratios to turn a multiple in 3-5 years. That's it. AC Milan helping drive growth in other markets and claiming that in their value? Enronesque at best...


Unless, there is a emotional tie to someone wanting to have some fun owning a football club, the Chinese are here to drive earnings that are material to AC Milan and turn a profit. Simple.

Im not sure any PE fund can return anything in 5 yrs...simply because their investments are that big.

So what you'll see is PE funds usually go for longer investment periods with more moderate returns in mind. 2x 3x

Now the question is when to exit - this is where the funds LP mix and the longer term vision for setting up the fund comes into play.

If people want to make quick money in 5 yrs AC Milan is a terrible investment. Even if we win the CL in 5 yrs our value will not go up by much. Even if we get to 1 Billion that is less than a 33% increase.

There are much better ways to get those sorts of returns.

While we can't speculate about exactly these guys plan to do...i think it is safe to bet that this is not a 5 yr investment.

No one can get decent returns on a nearly 1 Billion investment in 5 yrs. Making a quick 300 million profit doesn't seem like anything to a state owned fund.

I've raised Venture Capital from Indian Investors and A lot of Chinese and Japanese funds give our investors exits at a later stage.

I would be very very surprised if they sold Milan in 5 years for a small profit.

[necromancer]

Stop speaking nonsense, General. Or take it to the WNT.

[General]

Originally Posted by vidarth

Im not sure any PE fund can return anything in 5 yrs...simply because their investments are that big.

So what you'll see is PE funds usually go for longer investment periods with more moderate returns in mind. 2x 3x

Now the question is when to exit - this is where the funds LP mix and the longer term vision for setting up the fund comes into play.

If people want to make quick money in 5 yrs AC Milan is a terrible investment. Even if we win the CL in 5 yrs our value will not go up by much. Even if we get to 1 Billion that is less than a 33% increase.

There are much better ways to get those sorts of returns.

While we can't speculate about exactly these guys plan to do...i think it is safe to bet that this is not a 5 yr investment.

No one can get decent returns on a nearly 1 Billion investment in 5 yrs. Making a quick 300 million profit doesn't seem like anything to a state owned fund.

I've raised Venture Capital from Indian Investors and A lot of Chinese and Japanese funds give our investors exits at a later stage.

I would be very very surprised if they sold Milan in 5 years for a small profit.

I can't argue with you if you're saying Chinese investments typically hold longer. my experience is with 4-5 year turn strategy US based PE groups .

With that said, You can definitely double your multiple in 4-5 years with key moves operationally- stadium, TV rights in new markets blah blah blah. The exponential earnings don't mean as much with a dollar amount that big.

Taking a brand like AC Milan and bringing them back to the CL while at the same time marketing them to a huge audience can easily do the trick.

What is growing on me is your idea that the state is investing into a vehicle that will drive other investments.

I still say a number closer to 5 years is more likely.

You're not thinking of leveraging costs to raise a higher earnings ratio.

Milan's expenses were probably mismanaged.. Strike that.. Definitely mismanaged.
Properly managing, they should see much more drop through earnings for incremental revenues.

[Nasha]

Originally Posted by vidarth

Im not sure any PE fund can return anything in 5 yrs...simply because their investments are that big.

So what you'll see is PE funds usually go for longer investment periods with more moderate returns in mind. 2x 3x

Now the question is when to exit - this is where the funds LP mix and the longer term vision for setting up the fund comes into play.

If people want to make quick money in 5 yrs AC Milan is a terrible investment. Even if we win the CL in 5 yrs our value will not go up by much. Even if we get to 1 Billion that is less than a 33% increase.

There are much better ways to get those sorts of returns.

While we can't speculate about exactly these guys plan to do...i think it is safe to bet that this is not a 5 yr investment.

No one can get decent returns on a nearly 1 Billion investment in 5 yrs. Making a quick 300 million profit doesn't seem like anything to a state owned fund.

I've raised Venture Capital from Indian Investors and A lot of Chinese and Japanese funds give our investors exits at a later stage.

I would be very very surprised if they sold Milan in 5 years for a small profit.

Its possible that some investors may cash out/exit after 5-10 years and sell to other investors/funds. However, I dont imagine SDIC doing that... at least for the next 15 years. They are in this for the long-haul.

IMO, a club is deemed to run more efficiently when multiple eyes are on the management... not just from one owner but from several shareholders.

Does it make sense to say that the club was purchased by several PE funds who lumped their money together? Or those PE funds acted as LPs and gave their money to a GP which bought it outlining the ownership of each LP?

It appears that its the former model which is more common in complex arrangements.

Nevertheless, either case we are kicking inefficiencies (aka Galliani) out.

[Mr Delicious]

Careful general, you might get banned for having an opinion

[bacon d'or]

Sino Europe for 'new Milan president'
By Football Italia staff

Milan's new owners, Sino Europe, promise a new president for the club: 'But Silvio Berlusconi will remain in a honorary position'.

The reshuffling of the Rossoneri's higher echelons has already begun, with Marco Fassone expected to be confirmed shortly as the new director general.

“After the completion of the acquisition, we will announce a board of directors and elect a new President,” the new owners told China Economic. “Mr. Silvio Berlusconi will serve as an honorary president of the club.

“Other investors will join our fund and will be revealed upon the closing of the deal.

“We chose Milan for their glorious history, which allows China to develop football both culturally and as a business.

“It’s the first time that [government-backed] Chinese capital buys a top club in world football. Sino Europe enjoyed great help from the government of Changxing for the acquisition of Milan and we'd like to extend our special thanks to the finance office, which allowed for all of this.”

[Jasper]

Can someone explain what Changxing is? I read their wiki but ... how is the Chinese county/oblast/state system?

[necromancer]

Originally Posted by Jasper

Can someone explain what Changxing is? I read their wiki but ... how is the Chinese county/oblast/state system?

Went through these exact feelings today. Still have no clue what Changxing government is. Final conclusion was that it may have been Chongqing which is a much larger metro.

But I doubt that it's that easy. We need someone who knows this to explain why Changxing government is significant and rich.

[MilanMB]

Originally Posted by vidarth

SDIC is a fund that invests in other funds. Their portfolio and investment strategy will not be available to the public.

The fund that has bought Milan is a "Fund of funds"...ie a fund brought together by investments from SDIC and other funds.

Usually the more funds there are in the hierarchy, it is a good bet to assume that the investment will be a longer term bet.

An example:

An Angel Investor invests his own money - he will want his exit in 1-2 years.(Usually wants 200x ROI over multiple rounds)

A Venture Capital firm creates a Fund from several High Net Worth Individuals and Companies. They stay invested for 4-10 yrs. (Usually wants 20x ROI but moonshot companies usually return 100x like Facebook)

A Private Equity Fund (Like the one that has bought Milan) raises money from other Institutional Investors (Like SDIC) and the other Investment bodies that now own Milan. This sort of Investment is done with a 10+ year investment period in mind. (These guys usually take mature companies and aim for 2x or 3x ROI)

So the goal will be to bring Milan to a 2 - 2.5 Billion Valuation in 10-15 years (we're correctly at 0.75 B)

Now I've personally preferred this sort of deal to arab billionaire because the one thing that you can be sure is that these guys know how to tap into the China opportunity for $$. This is a Omnichannel Brand with several revenue streams as far as they are concerned.

They will work to correct/fix and improve all the revenue streams and hire the best guys to run the footballing side of things. Any non performers will be immediately fired (because they answer to their parent funds aka LPs like SDIC who will be monitoring the investment).

What I've found interesting is that Sovereign Wealth Funds usually invest in companies which they see as being part of a larger strategic goal for the State. This could be something like making China win the Fifa world cup by 2030.

The Chinese have the best infrastructure in place for athletes. Thats why they win so many medals at the Olympics.

What I'm trying to get at is that while profits are important, the true value of this Investment may be realized on how much of a role AC Milan plays in making football popular in China.

They will make their exit when they feel that Milan has played its part.

This is a lot of speculation, but this is how larger funds like these actually make strategic investments.

The rumor that Xi Jinping was in on the deal is not so far fetched after all.

One thing for sure...once this goes through in November....Inter will be our bitches like they always have been.

Originally Posted by vidarth

Im not sure any PE fund can return anything in 5 yrs...simply because their investments are that big.

So what you'll see is PE funds usually go for longer investment periods with more moderate returns in mind. 2x 3x

Now the question is when to exit - this is where the funds LP mix and the longer term vision for setting up the fund comes into play.

If people want to make quick money in 5 yrs AC Milan is a terrible investment. Even if we win the CL in 5 yrs our value will not go up by much. Even if we get to 1 Billion that is less than a 33% increase.

There are much better ways to get those sorts of returns.

While we can't speculate about exactly these guys plan to do...i think it is safe to bet that this is not a 5 yr investment.

No one can get decent returns on a nearly 1 Billion investment in 5 yrs. Making a quick 300 million profit doesn't seem like anything to a state owned fund.

I've raised Venture Capital from Indian Investors and A lot of Chinese and Japanese funds give our investors exits at a later stage.

I would be very very surprised if they sold Milan in 5 years for a small profit.

Thanks for informative posts.

I know very little about stuff like this. Your posts calm my nerves about the new owners, as I'm very worried about their purpose with buying the club.

-

You know Milan was used (very successfully) by Berlusconi to promote his brand. I'm thinking the Chinese want to do the same with their brands. That won't happen with an half-assed short term investment.