Dalian Wanda Commercial Management Group appears to be setting the stage for a return to the Hong Kong stock exchange after receiving fresh backing from a southern Chinese city’s government.
The property arm of billionaire Wang Jianlin’s Beijing-based Wanda Group announced that on Monday it signed an agreement under which the State-owned Assets Supervision and Administration Commission (SASAC), an entity controlled by the government of Zhuhai, would invest RMB 3 billion ($460 million) in a firm spun out from the once highflying developer.
The terms of the deal stipulate that Wanda Commercial must reorganise its non-development activities under the name of Wanda Light Assets Commercial Management Co, to be incorporated in Zhuhai with Wanda Commercial as the parent firm. A Wanda insider told Chinese website Sohu.com that the purpose of the restructuring is to prepare the company to go public.
If an IPO eventuates, it will be Wanda Commercial’s first public listing since exiting the Hong Kong bourse in 2016. Wanda last week said it was abandoning its attempt to list on a mainland exchange but still hoped to achieve a listing “as soon as possible”.
The restructured company, which will manage but not own Wanda’s retail properties, aims to list on the Hong Kong exchange, according to Reuters, which cited a source with knowledge of the plans.
Promises to Keep
The decision to list would help Wanda fulfil a pledge made to four strategic investors more than three years ago.
In January 2018, Tencent’s QQ Music division, Suning.com, JD.com and developer Sunac China Holdings agreed to invest about RMB 34 billion to acquire a 14 percent stake in Wanda Commercial. The deal between Wanda and the four investors required Wanda Commercial to complete a listing before 31 October 2023, though the terms did not specify a listing location.
Monday’s announcement came just six days after Wanda Commercial withdrew its mainland A-share IPO application, the latest chapter in Wanda’s long and tortured history with capital-market fundraising — a tale that began with the developer’s record $3.7 billion Hong Kong IPO in 2014. That early success gave way to dreams of a still-greater valuation on the mainland, which led the company to buy back its Hong Kong shares less than two years later, but efforts to list in the mainland ultimately fell flat.
Wanda Commercial remained China’s top developer by operating income last year with RMB 35.5 billion ($5.4 billion), according to data provider CRIC. But the company more recently has sought to play down the developer tag and reposition itself as an investment manager.
That sort of American-style evolution would mirror the approach taken by Singapore’s CapitaLand, which last week revealed plans to take its development operations private and consolidate its investment management platform and lodging business into a new publicly-traded entity.
Zhuhai has emerged as a significant backer of companies seeking to restructure this year, with entities controlled by the government of the Guangdong province city having lent a financial hand to a pair of distressed mainland tech firms before entering this property partnership.
In January, two government-backed companies, Zhuhai Huafa Group and Shenzhen Special Economic Zone Development Group, joined insurance giant Ping An in arranging a debt restructuring of Peking University Founder Group. The troubled conglomerate last year failed to repay an onshore bond, leading to a cross-default on $3 billion in offshore bonds.
Also in January, the Zhuhai government announced that it would invest RMB 2 billion in debt-ridden EV startup Faraday Future to help the company set up a production base in the city, Sina News reported.