Second Floor. Reception Room!
The group of Hong Kong bigwigs in the room had originally intended to invest in Li Yi’s company, hoping to use that as a way to connect with Li Yi and the “forces” behind him.
They were all somewhat disappointed after being turned down, but they didn’t expect Li Yi to shift the conversation and offer them a glimmer of hope.
“Mr. Li, I’m not sure what kind of partnership you’re referring to,” Li Mingji asked first.
Li Yi smiled and said, “I’m sure you’ve all heard of private equity funds. My investment firm specializes in this very field. If you’re interested, you can entrust a portion of your funds to our company for management!”
The private equity funds were, of course, no strangers to those present, and upon hearing that this was the nature of the collaboration Li Yi had mentioned, they were somewhat disappointed.
After all, the typical annual return on private equity funds isn’t particularly high; even 20% is considered remarkable. Just think of that “stock god” from Zaiying—his annual return on investment is only around 28%.
More importantly, private equity funds require management fees, typically 5% of the total assets under management.
To be honest, this held absolutely no appeal for the people gathered here!
For a moment, the room fell silent!
It was Li Futiao who stepped in to break the ice, smiling as he said, “Brother Li Yi’s company is launching, and the Li family is the first to support it. Tomorrow, I’ll have our finance department transfer 50 million Hong Kong dollars to your private equity fund!”
The others quickly caught on and immediately chimed in, “Hongji Real Estate is willing to contribute 10 million Hong Kong dollars for Mr. Li to manage on our behalf!”
“Our Ho family is willing to contribute 20 million…”
However, Li Yi raised his hand and said calmly, “Ladies and gentlemen, I am personally very grateful for your support. But business is business. I would still ask you all to listen to the rules of our Star International before deciding whether to invest and let us manage your funds!”
“Brother Li Yi, are your company’s rules different from others’?” Li Futao asked with interest.
“They are indeed quite different!”
As he spoke, Li Yi motioned to Li Yunbao standing nearby. Amidst the stunned gazes of the crowd, the young master immediately handed the documents in his hands over to Li Yi.
This move took everyone present by surprise—after all, everyone knew exactly what kind of temper the young master had.
He’s a real hothead—prone to outbursts and impossible to please!
No one could have imagined he’d be so obedient—it was truly unbelievable!
Li Yi paid no heed to what others were thinking. After taking the document from Li Yunbao, he immediately opened the section outlining the rights and obligations of both parties and placed it directly on the small round table in front of everyone.
Then, speaking clearly and distinctly, he said, “Ladies and gentlemen, the policy at Star Investment is that regardless of the amount of funds you manage on our behalf, we charge a flat 5% management fee annually. However, we also guarantee that the annual return on the funds will not fall below 10%. If it does, our company will make up the difference…”
Before he had even finished speaking, the representative of the Guo family interjected, “Isn’t that how other private equity funds operate in the market? What makes this any different?”
Upon reflection, the crowd realized this was indeed the case. Some funds set higher management fees and guaranteed returns, while others set them lower, but overall, the differences were minimal.
“Please bear with me a moment and let me explain. The biggest difference between us and other investment firms is that our performance fee is high—50% of the fund’s return!”
Upon hearing this, the bigwigs present all furrowed their brows.
It’s standard practice in the industry for private equity fund managers to take a cut of the returns, but the standard commission rate is typically kept below 20%.
Li Yi’s opening offer of 50% made him seem like a complete outsider—or, at the very least, someone who lacked respect for these wealthy Hong Kong Island elites…
However, before they could speak, Li Yi’s voice rang out again: “Of course, there’s a reason for the high commission—our company guarantees to cover any losses!”
“Whoosh!”
Li Yi’s words were like dropping a depth charge into a calm lake, leaving everyone wondering if they’d heard him wrong!
Loss coverage—is there really such a risk-free investment option on the market?
After all, by the very nature of private equity funds, capital is not guaranteed, and losses are quite normal.
And by regulation, investment losses—whether in stocks or funds—are borne by the investors themselves. No institution would promise investors guaranteed profits, let alone guarantee compensation for losses.
“Mr. Li, are you serious about this ‘full compensation for losses’?” Li Mingji asked in a deep voice.
“Of course I’m serious—this will be explicitly stated in the contract!”
Saying this, Li Yi pointed to the contract template on the table.
“What percentage will you cover?” Li Mingji asked again.
“100% compensation. As long as I can afford it, I’ll cover the full amount of all losses—but…”
A shift in tone often signaled a key point, and for a moment, everyone’s attention turned back to Li Yi.
Li Yi didn’t keep them in suspense and continued, “However, I’ll only issue a limited number of these loss-coverage contracts tomorrow when we open—no more than 30 copies—and priority will be given to everyone here.”
“Furthermore, the contracts are valid for a maximum of five years. After five years, these contracts will terminate, and we will never issue them again!”
Although the promotional impact of such contracts was obvious, Li Yi knew that they violated standard business practices. It was acceptable to do this once in a while, but it couldn’t be sustained over the long term.
Otherwise, it would not only deal a devastating blow to the entire market but also have adverse consequences for him personally.
It’s not hard to understand why. After all, doing this would funnel the majority of capital into the companies he controls—how could other investment firms survive?
If they can’t survive, they’ll certainly find a way to take you down!
Li Futiao said with a slightly serious expression, “Brother Li Yi, you’d better think this through. This is a 100% loss guarantee—it means your company is shouldering all the investment risks alone!”
“I’m well aware of that, which is precisely why I dared to propose a 50% profit split!” Li Yi replied.
“Mr. Li, is there a cap on your company’s investment amount?” asked He Guangdong.
“There’s no upper limit, but the indemnity contract has a minimum investment requirement—each contract must be no less than 100 million Hong Kong dollars!”
“Whoa!”
At those words, everyone present couldn’t help but gasp.
Although 100 million wasn’t a huge sum for people like them, it was by no means a small amount—after all, most of them hadn’t yet reached a net worth of 10 billion.
More importantly, investing in private equity funds requires cash—and net worth is not the same as cash.
Take Huang Lixing, for example: despite a net worth of three or four hundred million Hong Kong dollars, he could ultimately only scrape together 37 million Hong Kong dollars.
On top of that, the recent stock market crash had left the vast majority of them with heavy losses; there were likely only a handful of people on the entire island of Hong Kong who could actually put up 100 million Hong Kong dollars for investment.
However, the terms Li Yi offered were indeed tempting: an annual return of no less than 10%, with Li Yi personally covering the shortfall if that target wasn’t met. Moreover, he promised to fully compensate for any losses—it was a surefire win!
Just as everyone was deep in thought, Li Yi spoke again: “That’s the gist of the investment partnership. Please take some time to consider it carefully once you return!”
“If you’re interested in partnering, please come to Star International Investment on the 17th floor of Yuanhua Tower tomorrow morning. I’ll be there waiting for you!”
“As for now, let’s head downstairs and have some fun with the rest of the group!”
Hearing Li Yi’s words, everyone rose to their feet and headed downstairs…
……….