Fosun Buying Back 50% Stake in Shanghai Bund Complex for $1B

Mainland investment giant Fosun International has agreed to repurchase a 50 percent stake in its Bund Finance Center for RMB 6.34 billion ($1 billion), nearly six years after offloading the half-interest in the Shanghai waterfront complex.

Upon closing, Fosun will reclaim full ownership of the commercial complex, which held its grand opening in 2019 and has a gross floor area of 425,392 square metres (close to 4.6 million square feet) across office, retail, hotel and cultural space.

The Shanghai-based conglomerate led by chairman Guo Guangchang must pay the seller, Chinese shadow banking firm Zhongrong International Trust, in full and in cash before 31 March to complete the transaction, according to a Monday filing with the Hong Kong stock exchange.

The buyout of ZRT’s interest will enable Fosun “to build a commercial complex project more in line with the group’s ecosystem”, Guo said in the HKEX filing without elaborating further.

Tubular Veils

Situated at 600 Zhongshan No.2 Road in the core district of the Bund, the BFC overlooks the Huangpu River to the east and the Yuyuan Tourist Mart to the west. The property includes 267,514 square metres of office space, a 117,520 square metre shopping centre, a 36,346 square metre hotel and the 4,211 square metre Fosun Foundation art centre — a Norman Foster-designed facility known for the moving veils of bamboo-like tubes around its facade.

Back in December 2016, Fosun reached an agreement to sell the 50 percent stake in the BFC to Jiaxing Shengshi Shenzhou Wenli Investment Partnership for RMB 5.33 billion, saying at the time that the disposal would increase the liquidity of Fosun’s assets and improve the financial flexibility of the group.

The half-stake changed hands again around April 2019, Shanghai web portal Eastday reported, with ownership of the equity interest transferring to ZRT, whose backers include state-controlled Jingwei Textile Machinery Co and conglomerate Zhongzhi Enterprise Group.

The RMB 6.34 billion consideration for the half-stake was arrived at after deducting total liabilities associated with the asset from the appraised value of RMB 23.1 billion for the complex, with Fosun paying the equivalent of just over RMB 54,251 per square metre of GFA to take back full ownership of its South Bund trophy.

Tangled History

The BFC had once been the subject of a messy legal battle between Fosun and Beijing-based developer Soho China, which in 2011 struck a deal to pay RMB 4 billion for a 50 percent stake in the project held primarily by Greentown China Holdings, Fosun’s partner at the time.

Fosun took Soho to court in 2012 on the grounds that the Shanghai company enjoyed the right of first refusal on any sale of shares in the project company. An intermediate court ruled in Fosun’s favour in 2013, leading Soho to appeal to a higher court.

The case ended in 2015 when Soho agreed to surrender its half-interest for RMB 4.6 billion, with Fosun obtaining full ownership of the project until its 2016 stake sale to Jiaxing Shengshi Shenzhou Wenli Investment Partnership.

Note: This story has been updated to show that Fosun paid the equivalent of RMB 54,251 per square metre for the acquisition. An earlier version cited a lower figure. Mingtiandi regrets the error.