Li Ka-shing lays out a large model
When real estate developers shout about the transformation to the tech sector, it is often when their core real estate business is in crisis. In order to find a new growth curve, in 2018, Xu Jiayin officially entered new energy vehicles by investing in Jia Yueting's Faraday Future, and then embarked on the road of independent car manufacturing; In the same year, Yang Guoqiang began to invest in the research and development of construction robots and the creation of a high-tech agricultural ecosystem.
However, the two people's high-tech transformation strategies have not worked, Evergrande Auto has repeatedly fallen into production shutdowns, and Country Garden's two major technology transformation businesses are still in the landing stage. Evergrande and Country Garden, which could not wait for help, ushered in thunderstorms in 2021 and 2023 one after another.
Compared with Xu Jiayin and Yang Guoqiang, Li Ka-shing, who also started with real estate, can smoothly pass through the downturn cycle of real estate, which is not without the benefits of successful high-tech transformation. Although Li Ka-shing has also suffered losses in the field of new energy vehicles due to his investment in Changjiang Motor and WM Motor, new energy vehicles are not the whole of Li Ka-shing's high-tech transformation strategy.
From betting on the telecommunications industry in the early days to investing in Skype, Facebook (now renamed Meta), Spotify, Zoom and other star companies in the technology field, Li Ka-shing has achieved remarkable results in the process of high-tech transformation.
Li
After the rise of the big model wave, Li Ka-shing did not fall behind. Recently, Li Ka-shing led a $97 million Series B financing for edge AI computing company Kneron. Neon said the funding will be used to accelerate the advancement of advanced AI, with a special focus on lightweight GPT solutions in the automotive field.
At present, most GPT models run in cloud data centers, resulting in high latency, high transmission data costs and insufficient user privacy and security protection, and the lightweight GPT solution directly equipped on the device terminal is considered to be one of the ways to solve the above problems, which is also the development direction of Qualcomm, Huawei and Xiaomi and other mobile phone chip manufacturers and brands.
In Li Ka-shing's view, "AI is changing the world... It is indispensable to promote the effective application of AI. "This has been reflected in Neon. In order to promote the rapid landing of AI applications, Li Ka-shing has previously led the investment in Neon twice in 2018 and 2022.
A
Neon is not the first large model company that Li Ka-shing has invested in. As early as 2012, when the big model boom had not yet appeared, Li Ka-shing invested in the star company DeepMind, the star company of the current big model track, at this time, it was four years before DeepMind became famous by defeating the Go world champion Lee Sedol in the Go man-machine battle with its AlphaGo.
Other prominent entrepreneurs involved in DeepMind's fundraising in 2012 was Musk, who invested $5 million in DeepMind. With DeepMind's acquisition by Google for $400 million in January 2014, both Li Ka-shing and Musk have made significant gains.
Musk
Li Ka-shing said that being able to participate in DeepMind's early investment is a valuable fate. Although Musk and DeepMind parted ways, Li Ka-shing's relationship with DeepMind and Musk has not yet dissipated.
Three years after withdrawing from DeepMind's shareholder list, in May 2017, Li Ka-shing met with DeepMind's two founders, Daimis Hassabis and Mustafa Suleiman, in Hong Kong. On the same day, Li Ka-shing put on a studious look, prepared paper and pen, and listened to the two explain the stage results of AI research direction and various applications.
In 2022, when Mustafa Suleiman and others teamed up to create a large-model startup Inflection AI, Li Ka-shing successfully grabbed the first batch of investment places, including Microsoft, top venture capital Greylock, Bill Gates, former Google chairman Eric Schmidt, former CTO of Meta Mike Skolopf, etc.
In July 2023, Inflection AI completed a new round of $1.3 billion in financing, with a valuation of $4 billion, becoming the world's third largest generative AI unicorn after OpenAI and Anthropic.
In the new wave of AI technology fueled by large models, Li Ka-shing's investment frequency in AI has also increased. In 2022, more than seventy percent of Li Ka-shing's investment projects are AI-related, including robotics company Promise Robotics, Cortical Labs, Deepcell, Kangaroo Health, etc. in the biomedical field.
With the continuous expansion of AI investment territory, Li Ka-shing and Musk, who was also a former DeepMind investor, began to compete on the same track.
In April, Li Ka-shing led a $10 million funding round for AI company Cortical Labs, a developer of living neural implant chip technology dedicated to developing new artificial intelligence using human neurons.
What Cortical Labs is doing is on the same track as Musk's brain-computer interface company Neuralink. Five months after Cortical Labs closed its financing, Neuralink announced that it had received human trial clearance from the U.S. Food and Drug Administration (FDA) for its first human trial.
B
Behind Li Ka-shing's bet on AI is his long-standing emphasis on new technological changes.
In 2013, Li Ka-shing, then 85 years old, said that he was deeply interested in new technology, and his exposure to new technology also made his mood younger, "The industrial revolution in the 18th century began in Britain; The 21st century is a scientific and technological revolution, with breakthrough developments in many industries, including the defense industry, agriculture, water conservancy, energy, medical care, life technology, telecommunications, and the Internet, and countless investment opportunities. ”
After grabbing his first pot of gold from plastic flowers and starting out with real estate, Li Ka-shing first set his sights on investment opportunities in the technology sector in the telecommunications industry.
Anticipating the imminent arrival of 2G wireless communication technology, in 1993, Li Ka-shing invested heavily through Orange and became the third largest service provider in the British telecommunications market. By 2000, Li Ka-shing sold Orange to French telecommunications giant France Telecom for $37.5 billion, setting a record for the world's largest telecommunications transaction at the time.
Later, in an exclusive interview with Caixin, Li Ka-shing admitted that "the sale of Orange has become one of the most successful major transactions for our company."
It was precisely by relying on the operation of buying first and selling later in telecommunications investment that Li Ka-shing surpassed the "Hong Kong brother Lee Shau Kee" at that time and became the new richest man in Hong Kong.
Li Ka-shing's passion for technology investment has been amplified by his successful investment experience in the telecommunications industry. In 2002, Li Ka-shing, then 74 years old, founded Victoria Harbor Investment, a venture capital institution focusing on investing in high-tech projects, and entrusted it to Zhou Kaixuan, a confidante of Hong Yan.
Commenting on Li Ka-shing's venture capital philosophy, Zhou Kaixuan commented, "He likes disruptive innovation. And, like SoftBank Son, the process of making a decision was quick.
In 2007, when Zhou Kaixuan recommended to Li Ka-shing to invest in Facebook (now renamed Meta), Li Ka-shing made the investment decision in just 5 minutes. Although Facebook was not yet profitable, its huge user base and mobile development plans made Li Ka-shing see the potential for disruptive change.
In 2007-2008, Victoria Harbour invested $60 million into Facebook for a total of $120 million. By the time Facebook went public in 2012, Li Ka-shing had reaped a fivefold return on the investment.
For the reason for making investment decisions quickly, Li Ka-shing once gave an explanation, saying that "most Internet startups lack income, let alone profit, investors are buying an attractive concept, 5 minutes is about the upper limit." ”
Before profiting from Facebook, Victoria Harbour Investments had already made a name for itself with the instant messaging app Skype in 2005. After that, Zhou Kaixuan led Victoria Harbour Investment to successively hit industry star companies such as online streaming music service platform Spotify and voice assistant Siri, and became a well-known venture capital institution in the industry.
The investment in Zoom is undoubtedly a major masterpiece of Victoria Harbour Investment in recent years.
In the story disclosed by Zhou Kaixin to Caixin, one of the reasons why Li Ka-shing decided to invest in Zoom came from its immediate pain points. In 2013, Li Ka-shing's executives demanded that they spend HK$20 million on high-end video conferencing hardware equipment, "which frightened Mr. Li (Li Ka-shing) at that time, and was so angry that he was angry." When he learned that we had invested in Zoom, a cloud-based, enterprise-focused, easy-to-use, low-cost software, no one was happier than him. ”
In that year, Li Ka-shing's Victoria Harbour Investment injected US$6.5 million to participate in Zoom's Series B financing, and in 2015, it added US$30 million to participate in Zoom's Series C financing.
During the epidemic, the emergence of new changes in remote home office has led to explosive growth in demand for Zoom, and its market value has skyrocketed. By October 2020, Zoom's share price peaked with a market value of more than $150 billion, at which point Li Ka-shing's Zoom shares were worth nearly $11 billion. At that time, Li Ka-shing's net worth was $32.6 billion, which means that Zoom alone earned him about 1/3 of his net worth.
But Li Ka-shing did not choose to sell at the highs. According to regulatory documents, Li Ka-shing reduced his holdings of 2.9 million shares of Zoom between March 2022 and December 2022, and currently still holds about 4.33% of Zoom. As of press time, Zoom's market value has fallen by more than eighty percent, leaving only $19.5 billion.
It is worth mentioning that Victoria Harbour Investment also invested in Musk's underground tunnel company, The Boring Company, in 2019.
C
It is not only Li Ka-shing's Zoom stock that has fallen into decline, but the real estate industry on which Li Ka-shing started has also entered a new round of downturn.
Domestic real estate giants such as Sunshine City, Taiho, Sunac, Country Garden and Evergrande have frequently thundered due to debt problems.
In order to stimulate the return of sales funds, in August 2023, Li Ka-shing's Changshi Group's new real estate project in Hong Kong, "Qin Hai Station II", began to sell houses by reducing the price to 7% off.
Li Ka-shing's low-price sell-off action further triggered the expectation of the downward pressure on the property market, and more analysts believe that Li Ka-shing's fire sale or want to reduce positions to recover funds, and there may be other projects with a better return on investment than real estate.
Obviously, the injection of AI technology represented by large models is becoming a new investment project that can outperform real estate in Li Ka-shing's eyes.
Li Ka-shing, who is well aware of the cyclical development characteristics of real estate and has personally experienced many financial crises, relies on diversified layouts to disrupt and restructure its assets in advance in every downturn cycle in the real estate industry, and investing in cutting-edge technology is only one of the means.
In the past two years, Li Ka-shing has successively sold a number of overseas businesses, involving office buildings, telecommunications, aircraft leasing and other fields, involving transactions amounting to HK$100 billion, including in March 2022, Changshi Group announced the sale of 5 Broadgate Tower property in London, UK for a transaction consideration of approximately $6.033 billion; In April 2022, Changshi Group completed the overall disposal of its aircraft leasing business at a transaction price of approximately HK$33.2 billion and a book profit of approximately HK$1.3 billion.
Earlier, Li Ka-shing also put Husky Energy and the telecommunications infrastructure business in the European market on the shelves one by one.
Ten years ago, Li Ka-shing withdrew investment from the mainland and invested heavily in the United Kingdom and other European countries to carry out asset restructuring and allocation as if it were yesterday.
In 2013, Li Ka-shing's investment in the mainland market peaked, and the revenue from the mainland once accounted for 50% of the entire Lee Group. With the divestment of Guangzhou Xicheng Metropolis Plaza for about 3 billion yuan in August of that year, Li Ka-shing's divestment path began, and his commercial real estate assets in the mainland include: Guangzhou Xicheng Metropolis Plaza, Shanghai Oriental Huijing Center, Nanjing Financial Center Tower, Beijing Pacific Century Center, Guangzhou International Toy City, Beijing Roosevelt Plaza, Shanghai Century Plaza, etc.
According to incomplete statistics, since cashing out in 2013, Li Ka-shing has withdrawn more than HK$100 billion from the real estate sector, and during the same period, Li Ka-shing spent nearly HK$147.9 billion on overseas acquisitions.
In the nearly HK$50 billion gap between the withdrawal of funds and overseas acquisitions, the high return on technology investment has undoubtedly contributed a lot to Li Ka-shing.
In the face of a new round of real estate downturn, AI is becoming an important weight in Li Ka-shing's asset restructuring allocation table.
Resources:
"Interview with Li Ka-shing: "I will not earn the last copper plate"" Southern Weekend
"Li Ka-shing's Return to the Mainland Market Truth" financial eleven
"Li Ka-shing is not Xu Jiayin's white knight", China Entrepreneur Magazine
"This year's most gold-sucking super unicorn is coming" is on the net
"Li Ka-shing wins numb again" Gelonghui