Chapter 65 – I Am Interested in Your Interest, But You Are Eyeing My Principal?
Hua Yongming got straight to the point, laying out the business proposal. Upon hearing it, Fang Hong raised an eyebrow, a hint of surprise flickering across his face.
"So, using my personal annual profit of 300 million yuan as the base valuation, I pledge my beneficiary rights for the next 33 years. In exchange, I receive 10 billion yuan in liquidity, with an annual interest rate of 36%?"
It was undoubtedly a bold move on Huayang Group's part—one that carried significant risks. If Fang Hong failed, it would mean his future beneficiary rights would be drastically devalued. Instead of earning 300 million yuan per year, he might only end up with 30 million, leaving him unable to repay the debt even in a lifetime.
This was the primary risk that Huayang Group had to bear, which justified the high interest rate.
Hua Yu elaborated further, and Fang Hong nodded in understanding.
"Yes, that's my father's intention," Hua Yu confirmed. "As long as you approve the plan, my father will immediately mobilize Huayang Group's resources to secure the full 10 billion yuan for you."
Fang Hong smiled, calm and composed. "For a man of his age to take such an aggressive approach, betting everything on one move—it's truly admirable. If I, as a young man, lack the courage to match that energy, wouldn't that be a disgrace?"
There was no reason to hesitate.
As long as he could secure liquidity, it was an opportunity to make money.
The essence of finance was leveraging capital. Once he had the funds, he had already won half the battle.
Though a 36% annual interest rate was exorbitant under normal circumstances, Fang Hong was confident—200% certain—that he could achieve a massive return. Even if he doubled his investment within a year, the profit from 10 billion yuan would be 20 billion. After deducting the capital cost, his net income would still be 6.4 billion yuan.
Without this funding, he wouldn't have to pay the 3.6 billion yuan in interest, but at the same time, he would lose out on 6.4 billion yuan in profits.
As long as he was certain of making a profit, even if the interest rate was as high as 50%, he would still accept the deal. The more he borrowed, the more he earned—there was no reason to refuse.
Moreover, he never intended to hold onto the loan for five years. His actual plan was to borrow for only nine months. At an annual interest rate of 36%, the monthly interest was 3%, making the total cost for nine months 27%, or 2.7 billion yuan.
After a moment of silence, Fang Hong suddenly spoke.
"However, I have a counterproposal. Would your father be open to considering it?"
Hua Yu raised an eyebrow, intrigued. "Go ahead."
Fang Hong's tone remained steady. "If my profits more than double in the next year, how about converting Huayang Group's principal plus interest into equity in Qunxing Capital?"
Hua Yu was stunned.
This guy...
We're only interested in his interest payments, but he's already eyeing our principal?!
Fang Hong had no intention of repaying the loan in cash. Instead, he wanted to perform a debt-to-equity swap—essentially turning the borrowed money into shares in Qunxing Capital.
After a brief pause, Hua Yu regained his composure and asked, "I can't make that decision alone. But I do want to know—if the debt is converted into equity, how much of Qunxing Capital would Huayang Group receive for the 13.6 billion yuan (including interest)?"
Fang Hong answered without hesitation, "5%."
Hua Yu's eyes widened in disbelief. "Wait... You're saying that even with 13.6 billion yuan, we would only get 5% of Qunxing Capital?!"
Internally, he couldn't help but call Fang Hong a madman.
Fang Hong, however, remained calm and smiled. "Brother Hua, that's actually a friendship price. In a year, when Qunxing Capital's valuation reaches 300 billion yuan, this 5% stake will be worth 15 billion yuan. If it were anyone else, they wouldn't even get 5% for 13.6 billion yuan."
Hua Yu was speechless.
To him, it felt like Huayang Group was being taken advantage of.
Unable to hold back, he questioned, "Brother Fang, just because you claim Qunxing Capital will be worth 300 billion yuan in a year doesn't mean it will be. The market ultimately decides valuations."
Fang Hong shrugged. "The market's opinion is irrelevant to me. It doesn't change Qunxing Capital's real value."
Hua Yu was puzzled.
300 billion yuan?!
This wasn't a small amount—it wasn't even 30 billion. How could Qunxing Capital possibly be worth that much within a year?
Fang Hong continued, "When the market gives Qunxing a 300 billion yuan valuation, it will mean that 13.6 billion yuan won't be enough to buy 5% of the shares. This is where decision-makers need the vision to recognize value ahead of the market."
He paused for a moment, then added with a smirk, "Just like when I first met Mr. Hua half a month ago—back then, 1 billion yuan could get you 5% of Qunxing Capital. But now, just two weeks later, even 1 billion yuan wouldn't get you 1%."
Hua Yu couldn't refute that. It was true.
Fang Hong had proven his value in just half a month, and it was now reflected in Qunxing Capital's soaring worth.
Fang Hong's words carried a deeper meaning: those who recognize value early gain the most rewards.
If everyone already sees the value, then the opportunity has already passed. At that point, it's no longer about discovering value, but realizing value.
Hua Yu exhaled sharply, shaking his head with a smile. "Brother Fang, I have to admit—you are a master at persuasion. The confidence and composure you exude are dangerously convincing. Even I find it difficult to resist."
Fang Hong burst into laughter. "There's no rush. I'm simply laying out an option in advance. You still have a year to consider it. Meanwhile, my original promise remains unchanged—if you secure 10 billion yuan in liquidity for me, you'll receive 1% of Qunxing Capital."
Hua Yu didn't hesitate. There was no reason to refuse.
Even at Qunxing Capital's current valuation, 1% equity was worth 200 million yuan—and it would only appreciate over time.
After discussing a few more details, Fang Hong left the company.
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Leveraging the 10 Billion Yuan
With 10 billion yuan in liquidity, Fang Hong would immediately invest in high-value core assets in the domestic market. By using stock pledges, he could reinvest the funds, turning the initial 10 billion into 11.6 billion yuan—a strategy similar to his previous 1-billion-yuan operation.
Looking ahead to 2009, Fang Hong had already calculated Qunxing Capital's expected revenue: 37.9 billion yuan.
After deducting Huayang Group's 2.7 billion yuan in capital costs and another 1 billion yuan in interest from stock pledges, the total financing cost was 3.7 billion yuan.
Thus, the expected net profit was:
37.9 billion - 3.7 billion = 34.2 billion yuan.
This entire process—from a 1-billion-yuan loan to controlling tens of billions—was all done with zero upfront capital.
Using other people's money to generate immense personal wealth.
That night, Hua Yu reported everything to his father, Hua Yongming, including Fang Hong's debt-to-equity swap proposal.
Hua Yongming laughed. "This young man... His ambition is truly remarkable."
Hua Yu nodded. "He's extremely confident, and the scary part is—he keeps proving himself right."
Hua Yongming smirked. "Fine. Let's give him the 10 billion yuan and see what he can do."
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End of Chapter 65.