First from left: Andre Third from left: The acquisition of British sports rights company MP&Silva led by Ricardo's Chinese companies Everbright and Baofeng, the transaction amount was announced to be US$1 billion, and won the "Best Media M&A Transaction of the Year" award from th

Author: Xiangji Finance (hsagucn) - Intensive Treatment Group

November 30, 2016, St. Paul's Grange Hotel, London, UK.

More than 100 investment bankers, private equity tycoons, lawyers, and operators from around the world gathered together in a glamorous atmosphere. The 4th Global TMT Finance WorldCongress 2016 is being held here.

The glory of this night belongs to two Italians, Riccardo Silva and Andrea Radrizzani.

First from left: Andre Third from left: Ricardo

Chinese companies Everbright and Baofeng led the acquisition of British sports rights company MP&Silva. The transaction amount was announced to be US$1 billion and won the "Best Media of the Year" award from the conference. M&A Deal Awards” .

As sellers, Ricardo and Andre brought the three intermediaries involved in the merger and acquisition to the stage and delivered their acceptance speeches under the spotlight. Information provided by the official website of the

conference shows that in this transaction, UBS was the advisor to MP&Silva, and DealGlobe and CICC were the advisors to the buyers Everbright and Baofeng.

In the photo, two Italians and three intermediaries were on stage, but the buyers Baofeng and Baofeng were not seen. The organizer of the conference was very considerate and put the logos of Everbright and Baofeng on the wall.

Where are the people from Everbright and Storm?

According to reliable written documents, Everbright and Baofeng were organizing teams to check MP&Silva’s accounts at the time, and they had been checking the accounts.

The two Italians on the podium were calm and proud. Obviously, everything was under their control.

Judging from the confusion after the acquisition, Mr. Xianji expressed serious doubts about the professionalism of this "Global TMT Financial Conference" and its awards.

According to Bloomberg news, two years later, in March 2019, Everbright Securities formally filed a lawsuit in the London High Court against Riccardo Silva and Andrea Radrizzani )—— is suspected of commercial fraud .

2 billion water floats

Ricardo and Andre are both Italian Milan people.

Milan, this fashion capital under the Alps, has two world-famous Serie A teams, AC Milan and Inter Milan.

Italians are best at turning sports into fashion.

At the beginning of this century, Ricardo started as a manager of AC Milan’s official channel and gradually began to get involved in the game copyright business. Later Andre joined, and the two gradually won the agency rights for many Serie A teams in popular areas of Europe. They registered the company MP&Silva in Luxembourg with offices mainly in London.

Riccardo Silva

Compared with Italy, where wealth has long been controlled by some established families, as an international financial city in Europe, London has more trading opportunities.

was supported by the large amount of cash flow brought by Serie A copyright. By 2007, MP&Silva had obtained the broadcast rights of Serie A, Premier League, America's Cup, Copa Libertadores, French Open , handball, F1 formula racing and other events. Although the earliest AC Milan relationship endorsement was not obtained, MP&Silva formed a strategic partnership with the Premier League team Arsenal .

MP&Silva’s profit model is very simple. It obtains the copyright of the event through bidding, and then sells the copyright to TV stations or online platforms.

In the first half of 2016, Ricardo and Andre's team sold 65% of their company MP&Silva's shares to a Chinese private equity fund led by Everbright Capital and Baofeng Video.

In order to prepare for this transaction, Everbright and Baofeng took the lead and went all out to raise 5.2 billion yuan of funds domestically and injected it into a company called Shanghai Jinxin Investment Consulting Partnership (hereinafter referred to as Jinxin Fund) to implement the acquisition. The selling price of

was claimed to be US$1 billion, but in fact the transaction amount was only about US$715 million. MP&Silva's original shareholders retain 35% of their shares.

In October 2017, the situation suddenly changed and MP&Silva did not win the copyright of Serie A for the next three years.Competitor IMG directly gave a sky-high price of US$371 million a year when bidding. MP&Silva's previous Serie A budget was less than US$150 million. However, Serie A copyright sales account for nearly half of MP&Silva’s revenue.

Some time after that, MP&Silva frantically lost copyrights to Arsenal, Premier League, Scottish Premiership, America’s Cup, etc.

In August 2018, Serie A took MP & Silva to court, demanding 44.4 million U.S. dollars in debt, followed by Bundesliga , French Open, Premier League, and International Handball Federation. Lawsuits came intensively. MP & Silva had a copyright purchase bill of more than 60 million U.S. dollars. Didn't pay.

In October 2018, compared with the rigorous procedures of Chinese courts, the London High Court acted as fast as lightning and directly announced the dissolution of MP&Silva.

Chinese buyers’ 5.2 billion was wasted.

History of Disillusionment

When Ricardo and Andre went on stage to receive the award in London, Everbright and Baofeng claimed to be forming a team to investigate MP & Silva's accounts.

In the form of Jinxin Fund, there are three general partners, Everbright Jinhui, Baofeng Investment and Shanghai Qunchang. However, in terms of management and decision-making, Jinxin Fund has the only executive partner - Everbright Jinhui. Investment Management Co., Ltd. (Everbright Jinhui, a subsidiary company of Everbright Securities). The acquisition of

was completed on May 24 in the first half of 2016. The outermost individual investors participating in Jinxin Fund will receive post-investment reports every quarter, half year and year-end.

From the third quarter of 2016 to the third quarter of 2017, during this year, for the MP & Silva project, the post-investment report reported that "domestic accounting firms are conducting on-site due diligence, audit ". In

’s annual report at the end of 2017 and post-investment report for the first quarter of 2018, the status of “due diligence and audit” was no longer mentioned. It seems that no major problems were found in the audit.

In January 2018, MP&Silva held a board meeting in Shanghai. Both parties put some issues on the table. :

MP & Silva management: company is short of money. Major shareholders should support it. "The company's normal operating cash flow for copyright purchase needs to be sufficient."

Jinxin Fund: How will plan to spend the money? Calculate it? I will then ask an accounting firm and a law firm to officially come in to do preliminary due diligence.

Something is already wrong. On the other hand, in the post-investment report, Everbright is still trying to impress investors:

1. In the future, Everbright Capital will use the MP&Silva platform’s rich international top event IP------ to create "sports + leisure and entertainment" A large platform to achieve diversified consumption.

2. Cooperate with real estate companies to implement MP&Silva into listed companies. "Currently, Everbright Jinhui is cooperating with the M&A Department of Everbright Securities Investment Bank and plans to formulate specific plans in the near future." "The Everbright team is working with Guangzheng International's investment bank to formulate a listing plan for this project in Hong Kong." "The

cake is not finished yet, something has happened to MP & Silva.

In April 2018, MP&Silva held its board meeting in London.

MP & Silva management: company is a bit tight on funds, so the major shareholders should spend some money.

Jinxin Fund: capital increase can be discussed. There is another way. Ricardo and Andre can use the money to buy back the shares.

results : The two parties have not reached an agreement on MP&Silva’s financial treatment, valuation, and capital increase.

May 4, 2018, MP & Silva conference call.

Storm Boss Feng Xin : can re-discuss the capital increase, or the two eldest brothers should buy back the shares.

Ricardo and Andre: is available. I will send you the signed board resolution later.

On June 4, 2018, the management of MP&Silva sent a capital increase request letter to the former shareholders who had made a fortune.

Ricardo: To be honest, I spent my money on my modeling career.

Andre: I don’t have any money in . I just bought a team in the Premier League.

result: no one responded.

In July 2018, Jinxin Fund went to London to negotiate with foreign shareholders (Ricardo and Andre).

Jinxin Fund: We have discovered that before the acquisition, MP&Silva’s financial data was suspected of falsification.

You have made so much money, but now the company is in trouble, should you consider providing financial assistance?

Ricardo and Andre: Everything has its own priorities. Let me tell you a little secret - some subsidiaries of MP & Silva are going bankrupt.

Jinxin Fund: . . . Your tricks are too deep. I have to hire another wave of lawyers and accountants to continue checking the accounts.

On September 14, 2018, Jinxin Fund officially issued a "Lawyer's Letter" to the original shareholders of MP & Silva to prepare for litigation.

Ricardo and Andre: you guys are too slow.

As early as August, Serie A took MP & Silva to court, demanding $44.4 million in debts. Debts broke out intensively in the Bundesliga, French Open, Premier League, and International Handball Federation.

On October 4, the bankruptcy liquidation of MP&Silva’s Monaco subsidiary took effect.

On October 16, based on the application of Infront Group, Ireland Dublin High Court froze the account of MP&Silva's Dublin subsidiary.

On October 18, based on the petition of the French Tennis Federation, the London court announced the compulsory liquidation of the MP&Silva operating headquarters in London. Employees of MP&Silva London have been dismissed, and the power of directors represented by Jinxin Fund has been suspended. The sole management control of the company belongs to the liquidator.

In early 2019, Bloomberg reporters interviewed both parties to the lawsuit.

Everbright Securities, on behalf of , did not answer questions about the lawsuit.

Ricardo and Andrea , declined to comment.

Unidentified third party - I want to break the news, three big news:

The Chinese consortium did not participate in MP&Silva’s emergency share placement (capital increase) last summer. Since the acquisition of

, MP&Silva has experienced three CEOs. Companies controlled by Chinese consortiums cannot retain experienced experts.

Chinese buyers changed MP&Silva's nominated directors at least three times and sent a group of attendees to board meetings - none of whom spoke English.

On June 1, 2019, Everbright Securities (601788) issued a lawsuit-related announcement, listing a list of recent lawsuits involved. However, until the eyes were dazzled, Xianjijun did not find any disclosure of the lawsuit by Everbright against the former shareholders of MP&Silva.

I don’t know if this 5.2 billion merger and acquisition liability lawsuit is considered a major matter that listed companies need to disclose to.

A flurry of demons

In Xianjijun’s opinion, the whole process of MP&Silva’s acquisition is a bit like a flurry of demons.

No. 1: In the face of a fundraising of 5.2 billion, the procedures and efficiency of financial due diligence investigations are extremely poor.

’s promotional materials during the fundraising period stated that Everbright and Baofeng hired well-known third-party institutions (CICC, KPMG, Ernst & Young) to ensure the authenticity and reliability of the underlying information.

However, from the first binding offer issued by Everbright Capital at the end of January 2016 to the completion of the MP&Silva acquisition on May 24, 2016, Xianjijun did not see the financial due diligence process for on the process table.

From the third quarter of 2016 to the third quarter of 2017, nearly one year after the acquisition, according to the post-investment report: "Domestic accounting firms are conducting on-site due diligence and auditing." In the first round of audits, which lasted for more than a year, so many well-known intermediaries did not conclude to investors that the project may have financial fraud issues.

’s promotional materials stated that at the time of the merger, MP&Silva’s in-process contract had guaranteed 90% of profits in 2017 and 70% in 2018, so the cash flow should not be bad.

But in January 2018, MP&Silva’s tight cash flow problem gradually emerged, and Jinxin Fund once again proposed to ask accountants and lawyers to come in to do due diligence. From June to July 2018, according to the post-investment report, Jinxin Fund began to conclude that the other party was suspected of financial fraud. It took two years and multiple rounds of audits after the acquisition of

before it was discovered that the counterparty was suspected of financial fraud. This efficiency and level are really a bit intoxicating.

Second: The terms of the acquisition, the constraints on the two Italians, were horribly low.

The Chinese side only acquired 65% of the equity of MP & Silva, and the two Italians still held more than 30% of the company's equity. There are some binding terms between the two parties. One of the stipulations of

: The equity held by the management team (35%) cannot be transferred, pledged or disposed of to other third parties within 5 years.

Agreement No. 2: When paying, 85% of the consideration (US$607 million) will be paid first, and the remaining 15% will be placed in an overseas regulatory account. The actual amount will be paid with reference to the 2016 performance completion ratio.

The solution for the two Italians is very simple - anyway, with the US$600 million in hand, whether it is the remaining 30% of the equity or the US$100 million in gambling funds, we have assets with a total book value of more than US$400 million. No more.

On this basis, the acquisition case does not seem to have agreed on clear repurchase conditions, credit enhancement guarantee clauses for fulfilling the repurchase, and recovery clauses for performance changes. ——If something goes wrong, just give them $100 million less?

Third, the fundraising of up to 5.2 billion yuan was completed within one month, and the fund integration capabilities behind it are amazing.

Especially after Sichuan Trust promised to skip 600 million orders, several institutions rushed to make up the funds. This was not something that ordinary fund mobilization could do.

According to Xianjijun’s understanding, some financial institutions bear moral responsibility and not only help raise the lower-tier people, but also help raise the middle-level people.

Fourth, the .2 billion Jinxin Fund has not been registered with the Asset Management Association of China at all, and there is no regular letter to the association. Is this what professional fund managers do?

is equivalent to saying that Everbright Jinhui bought a car in China and drove the car abroad without applying for a driving license.

Xianji Jun went to the association website to check and found that Everbright Investment Management (Shanghai) Co., Ltd. has the qualification of a private equity fund manager and can be regarded as having a driver's license, but it only has two vehicles in its name: one is called Everbright Jinhui Equity Investment Fund No. 1 is called Jiaxing Everbright Yuanpu Investment Partnership, but there is no Shanghai Jinxin Investment Consulting Partnership.

Looking more closely, Everbright has attracted the attention of the Asset Management Association and has been labeled as an abnormal institution.

5.2 billion huge fund will never come back. This matter is too big.

According to Xianjijun, among the 5.2 billion participants, some institutions have reported directly to the China Securities Regulatory Commission: "Failed to register private equity funds and failed to perform information disclosure obligations. " here Basically, there is considerable room for the majority of financial management investors to safeguard their rights, and this matter may become a milestone event in domestic financial management accountability.

In short, it doesn’t matter if you are professional, you have to be responsible, right? If

is not responsible, then the letter must be released, right?

If the letter is not done well, then at the very least, if you want to drive a 5.2 billion luxury car abroad, you have to apply for a driving license before going out, right?

Easter egg at the end of the article

The destruction of the 5.2 billion wealth of many investors has made two Italians realize their dream of getting rich. With US$700 million in hand, Ricardo and Andre immediately became popular, and non-stop realized the American dream and British dream in the diaosi era.

The life of a wealthy person is to buy, buy, buy.

Let’s first look at Ricardo. His home base is the United States and the United Kingdom. In 2016, he immediately established a Silva International Investment Company. What has this company done? The first word of

is model. He acquired MP Management, the second largest model agency in Europe, to highlight his Milan origin.

The picture comes from Ricardo's model website

The second word is real estate. Ricardo invested in Mast Capital, a real estate development company in Miami in the United States, and bought a number of real estate properties.

The third word is sports. As a truly wealthy club, Ricardo finally had the money to buy a team. He acquired the American Miami FC Football Club. In 2017, a large sum of money was donated to renovate the team's home stadium at Florida International University. The stadium has now been renamed Ricardo Silva Stadium.

And in mid-2018, as the capital chain of Li Yonghong , the capital player who acquired AC Milan, broke, there was news at the time that Ricardo would be introduced to become a shareholder of AC Milan.In December 2017, a gallery at the Bass Museum of Art in Miami Beach was renamed the Riccardo and Tatyana Silva Gallery after receiving a $500,000 donation from Riccardo.

opened restaurants. In 2016, he founded the restaurant group Forte dei Marmi and opened restaurants in London and Miami.

Ricardo couple celebrate renovation of Miami's Bass Museum of Art

MP Silva's other seller, Andrea Radrizzani, founded a sports and media investment company called Aser.

In April 2015, while preparing to sell his stake in MPSilva, Andre founded Eleven Sports Network, an international sports TV and online platform, through Aser. After the MPSilva crisis in 2018, Eleven Sports won the broadcast rights of La Liga and Serie A in the UK and Ireland.

In May 2017, with a large sum of money paid by the Chinese, Andre fully acquired the famous Premier League club Leeds United and became the owner of the club. Now Andre has become a celebrity in European sports and social circles.

As the owner of Leeds United, Radrizzani

Behind the counterattack of two Italian losers to become super rich, China's Storm Group and Feng Xin, Everbright Securities, China Merchants Bank , and Huarui Bank all vomited blood, and landmines are still Detonated layer by layer.

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