At first glance, the so-called VAM is related to gambling, but its literal translation in English means "valuation adjustment mechanism".

It means that when investors invest in enterprises, the valuation is different from that of entrepreneurs, generally the valuation of investors is low and the valuation of entrepreneurs is high. Then, sign a VAM agreement to balance the differences between the two. If the enterprise fails to achieve the performance agreed in the agreement, it will compensate the investor, and there will naturally be a reward for achieving it. Therefore, it can also be understood as a special kind of "gambling".

In recent years, many enterprises with foreign investment in China have adopted the situation of signing VAM agreements. Some entrepreneurs are happy when they win a bet, while others lose a bet or even lose a controlling stake in the company.

Of course, in most cases, foreign capital is a sure win, and the difference lies in the question of earning more and earning less.

Qi Zheng was very curious about how Hu Zhili would persuade himself to sign a VAM agreement with him after he had already stated that he would not accept Goldman Sachs' investment in shares.

So he said to Hu Zhili with great interest: "I would like to hear about it." ”

Hu Zhili did not sell Guan Zi either, and said directly: "Goldman Sachs can provide $200 million in low-interest financing bonds for the pig breeding subsidiary of Jiagu Agriculture and Animal Husbandry, but it must be collateralized by its 30% equity and the term of use is three years." ”

But in order to ensure the rights and interests of investors, Jiagu Agriculture and Animal Husbandry has to sign a VAM agreement with Goldman Sachs. ”

"From this year to 2009, if the compound annual growth rate of Jiagu Agriculture and Animal Husbandry's pig breeding revenue is less than 100, this financing bond will automatically become a convertible bond, and Goldman Sachs can convert the bond into an equity of 30 of the pig breeding subsidiary at the predetermined conversion price within the agreed period, and Jiagu Agriculture and Animal Husbandry cannot refuse. ”

"If the CAGR of pig farming revenue reaches 100, Jiagu Agriculture and Animal Husbandry can redeem the bonds at the original price, that is, Goldman Sachs will forgive all interest. ”

In the end, Hu Zhili looked at Qi Zheng and said word by word: "And if the compound annual growth rate of pig breeding revenue in these three years reaches 150, Goldman Sachs also allows Jiagu Agriculture and Animal Husbandry to delay repayment for two years!"

Qi Zheng glanced at Hu Zhili meaningfully.

When he finished talking about this so-called "gambling agreement", Qi Zheng instantly knew what Goldman Sachs was thinking.

To put it bluntly, Goldman Sachs' gambling plan is, after all, to take a stake in the pig breeding subsidiary of Jiagu Agriculture and Animal Husbandry.

Moreover, worthy of being an international financial tycoon, look at the indicators set by Goldman Sachs, which are obviously well-designed.

The compound annual growth rate is not a typical annual growth rate, simply put, a compound annual growth rate of 100 in three years means that the revenue in three years will be eight times that of the current one.

There is no doubt that Goldman Sachs, like Jiagu, is optimistic about the pork market in the next few years.

But how good the market is depends on how much it will be.

Jiagu pig farm slaughtered 900,000 heads this year, according to this year's pork market, plus fixed asset investment, the valuation will not reach 200 million US dollars - from this point of view, Goldman Sachs' curve shareholding is actually an absolute premium.

If Jiagu Farming and Animal Husbandry had accepted Goldman Sachs' financing bonds, it would certainly not have been a problem to grow at 100 percent a year in the first year — doubling the scale of farming. But the next two years will depend on the market. Qi Zheng understands this, and Goldman Sachs also understands it.

Then, from the indicators set by Goldman Sachs, it can be seen that their estimate is that in the next three years, pork Jiagu will be in a slowly rising market, and the compound annual growth rate of Jiagu agriculture and animal husbandry's pig breeding revenue may reach more than 50, or even 70, but it is difficult to maintain a compound annual growth rate of 100.

Therefore, Goldman Sachs' goal has always been to take a 30% stake in Jiagu Agriculture and Animal Husbandry's pig farms.

After finding out the bottom line of Goldman Sachs, Qi Zheng did not express his opinion on the spot, but just said that he would think about it before giving a reply.

Hu Zhili was very understanding and said goodbye with understanding.

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After leaving, Hu Zhili sat in the car, thought about Qi Zheng's attitude, and showed a smile of victory.

Qi Zheng did not refuse in the first place, which shows that he is tempted, which further shows that Jiagu is more optimistic about the pork market than Goldman Sachs.

But as long as G. Guken gambled, he achieved Goldman Sachs' goal.

Of course, Goldman Sachs is not a philanthropist, and the VAM plan with Jiagu is carefully analyzed and designed by the investment department, as long as Jiagu enters the pit, there is a high probability that he can get the equity of Jiagu pig farm.

However, even if Jiagu Agriculture and Animal Husbandry maintains a compound annual growth rate of 100 for three years and wins the bet, Goldman Sachs will not lose much.

Even if it maintains a compound annual growth rate of 150, Goldman Sachs will only give $200 million to Jiagu for five years, and for Goldman Sachs, which is a big business, the interest for five years is not in the eye at all.

The terrible thing about Goldman Sachs is not that it is strong, but that it can tolerate and tolerate short-term trading losses, but its purpose is long-term greed.

As long as Jiagu tastes the sweetness of financing, the opportunity for Goldman Sachs will come later - it is better than the current Jiagu Group hugging together and not accepting any investment.

No one can always be a winner. What's more, those excellent assets of Jiagu Group, in Goldman Sachs' view, will seek to be listed sooner or later.

Acting as an underwriter for the Chinese company IO and reaping huge profits from it is the most exciting deal for Goldman Sachs. Whether it is an overseas listing or an overseas merger and acquisition, Jiagu Group is Goldman Sachs' favorite customer.

Of course, that is a long-term consideration, and the most important thing at the moment is to increase Goldman Sachs' influence on China's pig industry chain.

To be honest, Goldman Sachs is optimistic about China's pig industry. However, in China, individual farming is very risky, and the aquaculture industry is not as big as possible, but must adopt a moderate-scale farming method according to the regional situation. To enter this industry, investors need to have a relevant industrial chain as a support.

Goldman Sachs has Shuanghui and Yurun's meat processing enterprises, as well as mature sales channels and brands, and has no worries about acquiring breeding plants upstream.

Coupled with a certain degree of control over the raw material futures market, the support of the industrial chain can be described as complete, so he even wants to acquire a wholly-owned upstream enterprise with perfect production and marketing such as Jiagu Pig Farm - but Qi Zheng will definitely not give him this opportunity.

Hu Zhili secretly took stock of the progress of the plan in his mind.

Goldman Sachs' current penetration of the upstream of the pig industry is still a strategic investment, and it can arbitrage and exit after the company is listed or merged.

On the other hand, as an international capital, controlling the pig industry chain does not necessarily mean making money at home, but also through the influence and control of the industrial chain, it can obtain corresponding benefits overseas, such as the income of raw materials, or the income of export products.

The most straightforward is pig feed. Goldman Sachs has a strong influence on the prices of soybeans, corn and soybean meal in international commodity trading, and at the same time exerts influence on the pig breeding enterprises in which it participates, and can obtain corresponding profits from them.

"No matter what, capital will always win. Hu Zhili said proudly.

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