Shares and Babies: another day in the life of Carson Yeung

As regular readers of this blog will know, one of the things that I have focused on has been the ownership of the club, and in particular the machinations of Carson Yeung as he strives to bring profitability and turnover to the business.

Much has been made of Carson’s purchase of 315million shares on Thursday, which has taken his holding to just a shade under 25% of the holding company. As the shares were bought from an independent third party, the price Carson has paid for the shares (and to whom) is not in the public domain; however, taking the price of HK$0.202 (which the shares were at the close of business on Thursday), it would have cost him HK$63.63million, or just a shade over £5million. For a guy who had to mortgage a house to ensure the cashflow for Birmingham City was okay, that’s a fair wedge of cash.

One question that has been asked by some Blues fans is why Carson has chosen to buy these shares off a third party when the club are currently trying to place 1.1billion worth of shares on the market. As Carson’s deal won’t put any new money into the club – the money he has spent will go to the person who he bought the shares from – why didn’t he buy some of the shares to be placed and invest some more cash in the team? I have to admit, I thought that was a fair point, and as such I thought it was worth looking into. From reading the original share placing document (pdf link), it would appear that the simple answer to that question is that he can’t buy the new shares – they have to be sold to new investors who are unconnected to the company and/or it’s current directors – and no more than just under 200million to any one entity.

Having thought about it, I’ve come up with this hypothesis: with the new placings of shares, the current director’s shareholdings have been diluted. Therefore, to retain control of the business (and to maintain confidence from investors and the Premier League), Carson has bought £5million more worth of shares, to ensure he remains the single biggest shareholder and retains control of the board. Where Carson has obtained five million quid from in cash is a good question – it could be that he obtained the shares by some other method, or that he has been loaned the money (possibly by his good friend Pollyanna Chu) – but that really is guesswork territory.

With stories like this one from the Guardian, it’s easy for Blues fans to worry about what is going to happen. From conversations with the club, I’m under the impression that the club feels there shouldn’t be a problem with obtaining a licence for the Europa League – the paperwork was issued on time, and it’s just got to go through the bureaucratic mill. As I stated in this post back in March, I cannot see how it would be the problem that some journalists are making out. Blues have not defaulted on wages, transfer fees or taxes yet – and there has been no indication yet that they are likely to.

On an unrelated note, Carson has been celebrating the birth of his daughter Camilla recently, giving a lavish reception at a top hotel in Shenzen. Whilst it’s nice to see some pics of him with his mother, his wife and daughter I thought it was worth noting some of the illustrious guests present. One thing I’ve continually said is that Carson seems to have this networking thing down, and “guanxi” is what it’s all about in Chinese business. Hopefully whilst the assembled guests wet the baby’s head, they also hobnobbed a bit about more potential deals to make money for BIH; something that if successful would ensure that Blues wouldn’t have to worry about journos banging on about Blues being in trouble.