Mingtiandi

Asia real estate and outbound investment news

  • Facebook
  • LinkedIn
  • RSS
  • Twitter
Sign Up / Login Logout

Lost your password?
Register
Forgotten Password
Cancel

Register For This Site

A password will be e-mailed to you.

  • Capital Markets
  • Events
    • Join the Mingtiandi Proptech Forum 2021
      • Asia Proptech 2021: COVID-19 Accelerates a Trend
      • Panel Talk: Tech Adoption in Logistics Real Estate
    • Promote Your Brand with the Mingtiandi Proptech Forum 2021
    • 2021 Mingtiandi Event Calendar
    • More Events
  • MTD TV
  • People
  • Logistics
  • Asia Outbound
  • Retail
  • Design & Construction
  • Research & Policy
  • Advertise

China Vanke Signs $9.2B Deal to Make Shenzhen Metro Its White Knight

2016/03/15 by Michael Cole Leave a Comment

Wang Shi Vanke

Baoneng’s takeover bid has brought some tense moments for Vanke chief Wang ShI (right) and his team

China Vanke, the mainland’s largest developer by sales, has signed an agreement with Shenzhen’s subway operator to buy a portfolio of sites from the state-owned firm in exchange for Vanke shares.

The deal, which is valued at up to RMB60 billion ($9.22 billion) would make Shenzhen Metro Group the largest shareholder in Vanke, effectively ending an attempted hostile takeover of the developer by Shenzhen conglomerate Baoneng Group.

The assets for shares swap would give Vanke access to a large portfolio of sites estimated at 4.5 million square metres, located above Shenzhen’s metro stations. The southern Chinese city is currently undergoing a housing boom that has seen average home prices rise more than 50 percent in the last year.

Vanke Fends Off Baoneng Takeover Bid

The agreement between Vanke and Shenzhen Metro, which was announced over the weekend, ends a rare takeover drama that began when subsidiaries of Baoneng began buying up shares in China Vanke in early December.

Although China’s real estate market has been slowing down in recent years, Vanke stands out as a prize not only for its scale, but also its profitability. In 2015 financial returns posted to the Hong Kong stock exchange on Sunday, Vanke said that it had achieved a 15 percent annual increase in profits, and net income rose to RMB 18.1 billion ($2.8 billion).

Unlike most Chinese developers, which are typically majority owned by either the government or by the company founders, Vanke’s largest shareholder, before Baoneng took a controlling stake in recent months, had been state-owned investment firm China Resources Group. Senior management and employees control only about 5 percent of Vanke.

Following the deal with Shenzhen Metro, the state-owned transportation firm will hold an estimated 20 percent of Vanke, with Baoneng retaining an 18.7 percent stake and China Resources 11.8 percent.

Deal Gives Vanke Chance to Grow with China’s Southern Hub

Shenzhen metro station

As part of the deal, Vanke will gain 4.5 million sqm of sites above Shenzhen’s metro stations

While diluting shareholders, Vanke’s tie-up with Shenzhen metro gives the developer, which is headquartered in the southern Chinese metropolis, a clear path to expand in China’s hottest urban property market.

While a complete list of Shenzhen Metro’s project sites has not yet been revealed, the company operated 131 metro stations at the end of 2015, and has plans to grow that network to a total of 371 stations by 2030, according to Credit Suisse analyst Jinsong Du. Municipal metro developers in China typically are able to displace local farms, residents and enterprises from land above station sites as part of infrastructure development, and then convert that land for commercial or residential projects.

Shenzhen saw new home prices rise 508.5 per cent between 2006 and 2015, according to research by Tsinghua University and the Lincoln Institute of Land Policy. Last year the southern commercial hub surpassed Beijing and Shanghai to become the mainland’s most expensive housing market, according to official figures on average home prices.

Formerly a fishing village before China’s economic reforms turned it into a laboratory for liberalised business practices, Shenzhen’s property market has benefitted from the city’s development as a tech centre, as well as its proximity to Hong Kong. In addition to being home to Vanke and China Resources, Shenzhen also hosts the headquarters of tech giant Tencent and telecom manufacturer Huawei.

The deal also provides Vanke with support from an old friend. The publicly-listed developer started out as a unit of the Shenzhen government more than 30 years ago, according to an account in the Wall Street Journal, before later being spun off during China’s privatisation drive.

Related Stories

  • Evergrande Picks Up Shenzhen Site for RMB 2 BilEvergrande Picks Up Shenzhen Site for RMB 2 Bil
  • Kaisa Defaults and Investors Go Back to SchoolKaisa Defaults and Investors Go Back to School
  • Kaisa Says Shenzhen Govt No Longer Blocking Project SalesKaisa Says Shenzhen Govt No Longer Blocking Project Sales
  • Sunac to Buy 4 Kaisa Projects for RMB 2.37B – Merger is OffSunac to Buy 4 Kaisa Projects for RMB 2.37B – Merger is Off

Share this now

  • LinkedIn
  • Share
  • Tweet
  • Email

Filed Under: Finance Tagged With: Baoneng Group, Chaintouch Investment, crebrief, Shenzhen

MTD Proptech Report Download

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Spectra District Landscape B

Get Mingtiandi Delivered

MTD Proptech Report

Latest Stories

JLL Alex Barnes

Office Vacancy in Hong Kong’s Central Tops 7% for the First Time Since 2004

laurent-jacquemin axa

AXA IM Breaks Ground on $260M Nagoya Distribution Centre with ESR

Amazon Asks India Court to Jail Erstwhile Partner and More Asia Real Estate Headlines

Ben Cha Grosvenor

UK Developer Grosvenor Appoints Kozo Hiratani as Japan President

Sponsored Features

Tony Horrell

Colliers’ Global Investor Sentiment Report Anticipates Up to 50% Surge in Investment in 2021 Sponsored Feature

Andrew-Slevin-John-Foord (4)

Insurtech to Help Address Underinsurance Across Asian Real Estate Assets in 2021 Sponsored Feature

CK Lau

Asia Pacific Logistics Sector: Increasingly Varied Sector Requires Multiple Approaches Sponsored Feature

COVID-19 Uncertainty Creates New Priorities for Real Estate Investors Sponsored Feature

More Sponsored Features>>

MTD-QR-Code-320

Top Stories

Singapore’s CDL Warns of Loss After China Developer Investment Swells to $1.4BSingapore’s CDL Warns of Loss After China Developer Investment Swells to $1.4B

JLL Recruits Finance Veterans to Fill Japan, India Leadership Posts JLL Recruits Finance Veterans to Fill Japan, India Leadership Posts 

Asia Real Estate People in the News 2021-01-25Asia Real Estate People in the News 2021-01-25

UK Developer Grosvenor Appoints Kozo Hiratani as Japan PresidentUK Developer Grosvenor Appoints Kozo Hiratani as Japan President


Connect with Mingtiandi

  • Facebook
  • LinkedIn
  • RSS
  • Twitter

Real Estate News

  • Capital Markets
  • Events
    • Join the Mingtiandi Proptech Forum 2021
      • Asia Proptech 2021: COVID-19 Accelerates a Trend
      • Panel Talk: Tech Adoption in Logistics Real Estate
    • Promote Your Brand with the Mingtiandi Proptech Forum 2021
    • 2021 Mingtiandi Event Calendar
    • More Events
  • MTD TV
  • People
  • Logistics
  • Asia Outbound
  • Retail
  • Design & Construction
  • Research & Policy
  • Advertise

More Mingtiandi

  • About Mingtiandi
  • Contact Mingtiandi
  • Newsletter Subscription
  • Terms of Use
  • Privacy
  • Advertise
  • Join the Mingtiandi Team

We use cookies in accordance with our Privacy policy to provide the best user experience on Mingtiandi and to safeguard user data. By continuing to browse you consent to the policy. AcceptRefuse