Love Affairs in Melbourne-Chapter 201 - 198 Some Changes (5)

Yan Ling’s "rich student" was none other than the girl named Allegro, who had driven a supercar to pick up Yan Yan from the airport in Florence.

This phone call also marked the beginning of the entire affair of Allegro helping Yan Yan find a house.

Allegro’s advice to Yan Ling was actually quite straightforward—divide the money into three parts.

A third of the money could be placed in private banking where it could be managed with little risk and available for withdrawal at any time.

A third of the money could be invested into the overseas insurance market, ensuring that in any event, such as bankruptcy, the founder’s death, or even extreme situations like war in one’s own country, the family’s overall wealth wouldn’t be impacted. (note 1)

A third of the money could go into private equity funds, which are riskier but also offer higher returns in the long term.

After graduating, Yan Ling had been working in management consulting, and the launch of Succession Plans was part of his job, so he knew quite a few people in high-end insurance.

However, Yan Ling had never ventured into the private equity sector, so he let Allegro recommend a few suitable private equity funds.

Allegro mentioned that her family was starting to try becoming a Limited Partner in a new private equity fund in the United States, and she offered to send the information to him.

A private equity fund usually has two types of partners: besides Limited Partners, there are General Partners.

General Partners can be simply understood as the managers of the fund.

General Partners are in charge of the fund’s trading and management, with their primary task being to make money for the fund.

In a typical private equity fund, the Limited Partners contribute all or at least the majority of the capital, which the General Partners then operate.

But Allegro’s family was unique in that they were becoming Limited Partners in a fund where the General Partner was also the largest investor.

Thus, through his classmate, Yan Ling became aware of a private equity fund that was in formation.

Because of confidentiality agreements that needed to be signed, Allegro had mailed the relevant information to Yan Ling.

Yan Ling had received the fund’s information during a time when Yan Dingbang and his wife were planning to travel to Melbourne for Yan Yan’s graduation ceremony.

After reviewing the fund, Yan Ling concluded that it indeed seemed to be a good choice.

Yan Ling saved himself the trouble of mailing and had his parents bring the fund information to Yan Yan during their trip to Melbourne.

On December 15, 2011, Yan Yan encountered Lei Pili in Melbourne.

On December 16, 2011, Yan Yan and Qi Yi "eloped" to have fun, and Qi Yi shared with Yan Yan the upcoming changes in his work; after hearing this, she expressed amazement and offered her full support.

On December 17, 2011, Yan Yan discussed "important family matters" in the living room with her parents and Aunt and Uncle. freēwēbηovel.c૦m

Yan Yan pulled Qi Yi aside to listen in. After hearing a bit of what the family planned to talk about, he excused himself to go upstairs and visit Yan Yan’s "boudoir."

Qi Yi felt that if Yan Yan had questions for him, he would certainly be happy to answer them, but given the current situation, he did not find it appropriate to join such discussions.

After Qi Yi went upstairs, Yan Yan received a thick stack of private equity fund information from her Uncle and Aunt, which had been provided by Yan Ling.

Yan Yan’s knowledge of finance was very limited, with her slight understanding mainly coming from what Qi Yi had taught her.

The material Yan Ling provided was full of financial terminology and a myriad of legal clauses, which instantly made Yan Yan feel overwhelmed.

Yan Yan decided to hand over the materials to Qi Yi, who had finished touring her room and had started watching TV in the upstairs living room instead of attending the Yan family’s meeting.

Such matters would be strenuous for her to deal with on her own, but they would be easy for Qi Yi to handle.

Yan Yan was not one to waste useful resources without making the most of them.

Yan Yan handed over the documents to Qi Yi, intending for him to pass the time and incidentally check whether the General Partner of the private equity fund recommended by Yan Ling was really capable or just a figurehead.

Qi Yi, as an industry insider, would certainly have access to more comprehensive information than Yan Ling, who was cross-disciplinary.

Thus, Qi Yi took the information about becoming a Limited Partner in the Ian private equity fund from Yan Yan’s hands.

At first, Qi Yi was surprised at how Yan Yan knew which fund he was going to.

But he quickly realized that the information he was looking at contained details many future members of his team had not even seen.

The documents Yan Yan gave him were unrelated to his job but related to what the Yan family had just been discussing.

Qi Yi had known for quite some time that Yan Yan was a "young lady," but the fact that Yan Yan’s family had so much idle cash to invest in Ian’s private equity still came as a surprise to him.

Not to mention that Ian’s ten-million-dollar entry barrier was a bit high, just the five-year lock-up period alone was enough to deter most domestic investors.

The best private equity funds often operate in a black box. If there are few investors, they don’t need to be approved by the U.S. Securities and Exchange Commission and also don’t have to report and disclose information to regulatory bodies.

These American private equity funds have highly confidential investment strategies. During the five-year lock-up period, regardless of whether the fund makes or loses money, it’s very difficult to redeem one’s investment.

These funds either do not allow redemptions during the lock-up period, or they require a notice of one and a half to three years in advance if one wishes to redeem early.

Moreover, if you redeem ahead of time, you’ll lose a significant portion of the investment’s value.

For the Yan Family to become limited partners in Ian’s fund implies that they do not plan to use the money they’re investing within the next five years.

During the five-year lock-up period, one cannot redeem nor inquire about the fund’s investment strategy. There aren’t such types of private equity funds in China. (note 1)

Qi Yi quickly reviewed the information, most of which he already knew.

In reality, Yan Yan should have had him sign a confidentiality agreement before showing him the documents, but she clearly did not consider him an outsider.

Yan Yan said that Yan Ling recommended this private equity fund, and her family was considering investing. She asked Qi Yi if there might be any problems with this fund.

Qi Yi had absolutely no reason to badmouth Ian’s private equity fund; he was very optimistic about it himself. Otherwise, he wouldn’t have made the firm decision to leave his current job and follow Ian to the United States after this visit.

With both Yan Ling and Qi Yi’s recommendations, Yan Yan’s faith in the fund soared.

She seriously went through all the tedious clauses to show how much she valued this matter.

Yan Dabang and his wife had only one daughter and did not have the issue of how to allocate their assets properly. Combined with their extremely limited English proficiency, they made Yan Yan a limited partner of the fund just before Ian’s private equity closed off new investments.

In fact, by the time the Yan Family made their decision, Ian’s private equity had already exceeded its fundraising "target" and wasn’t planning to accept new capital.

This situation ended quite satisfactorily due to the relationship between Qi Yi and Ian.

But this development made Qi Yi feel that if he were to work for Ian’s private equity, it might seem inappropriate.

Deep down, Qi Yi began to have a slight aversion to the situation.

It was also the reason why he hesitated to go out on his own with Ian afterward.

.................

note 1:

The insurance industry in China started relatively late.

Even though there are now countless insurance products in China and insurance brokers calling every day to harass people, truly differentiated high-end insurance products are still extremely rare in the country.

For example, in the United States, you can buy legal insurance.

Once you purchase this insurance, if your company gets sued one day, you can use your insurance to pay the exorbitant legal fees in the United States.

Otherwise, small companies could go bankrupt just by fighting lawsuits if targeted by larger companies.

Some small companies with decent development could accidentally catch the eye of a large company that makes an offer to buy them out, but the founders, who treasure their company like their child, do not want to sell at all.

Large companies have powerful legal teams. If you don’t sell, they might sue you for infringement for some reason. Regardless of whether the infringement claim is true, the lawsuit process alone can bankrupt a small company.

After the small company goes bankrupt from the lawsuit, the larger company can then turn back and take it over for a bargain.

Such instances happen occasionally in the United States, and most founders have no way to handle it.

Unless, that is, they have purchased legal insurance.

note 2:

There are also many private equity funds in China nowadays, both official and unofficial.

Even the official ones have a much lower entry barrier compared to the United States.

A high-performing private equity fund in China might have a one-million-RMB entry threshold with an added six-month lock-up period, which is already considered high.