Wang Jianlin is set on quadrupling his company’s market cap in the next five years
Asia’s richest man, Wang Jianlin, took his Dalian Wanda Group from a little known property developer to China’s biggest builder of malls in just over a decade. But now the billionaire, whose real estate business enjoyed Hong Kong’s biggest IPO last year at $3.7 billion, has even bigger plans.
In the next five years his Wanda Group will transform itself from a Chinese real estate developer, into a $200 billion dollar global conglomerate covering everything from finance, to ecommerce, to movies and theme parks, according to plans that Wang laid out this week at the company’s semi-annual meeting.
The scheme is all part of Wanda’s transition away from China’s slowing real estate industry – a change-over that Wang has attempted to accelerate with $2.5 billion in acquisitions so far this year.
Developing Two and a Half New Business Divisions
As part of its transformation into a service company from a mall builder, Wang sees Wanda sprouting two new branches of its business in the coming years, as well as developing its film and theme park businesses into a cultural division.
Wang’s malls are already mixing in cultural attractiions, such as this appearance by a Sailor Moon impersonator at Wanda Plaza Chengdu
The two new divisions will cover finance, including banking, securities, insurance, investment, and online payment; as well as ecommerce, including crowdfunding, smart card systems, and what the company refers to as “experimental products.”
China’s government has been encouraging companies to shift their focus towards services in recent years, as it seeks to decrease dependence on investment for achieving economic growth and hopes to tame asset bubbles.
Wanda, which owes much of its success to Wang’s ability to keep his company aligned with official wishes, says that its current plans will allow the group to derive 65 percent of both its revenues and its net profit from services by 2018.
The conversion to a service driven model could be made even more challenging on a percentage basis, by Wanda’s plans for expanding its property business, where it said earlier this year that it plans to add 900 more malls to its existing fleet of over 100 shopping centres.
To achieve its goals, Wanda says it is aiming for a total market capitalisation of $200 billion by 2020, with revenues of $100 billion, and net profit of $10 billion. As of today, the group’s two listed vehicles, Wanda Commercial Properties on the Hong Kong exchange, and Wanda Cinema Line on the Shenzhen exchange, had a combined market cap of $49 billion.
By creating the new business lines, Wang is also presumably creating potential candidates for new stock listings, which could help the group reach its $200 billion goal.
Building on $2.5 Billion in Deals
To help reach its goals and fill out its new business lines, Wanda says that its already planning a series of new acquisitions this year, as well as banking on more cross-border investments.
To build its new finance division, named Wanda Finance Group, Wanda said that it would be acquiring companies in the banking, securities and insurance sectors within the second half of this year.
In 2014 the group scooped up online payment platform 99bill.com, and just last month the company used the service to raise $800 million to fund some its new mall projects.
But Wanda’s acquisitions may not be limited to the finance division alone. Wang says that the history of Fortune 500 companies shows the importance of M&A, and the company announced that it has plans for six more acquisition this year. Wanda stated that the deals would include three foreign acquisitions this year, and an equal number domestically, without specifying further details.
The same statement said that the company would also rely on M&A to further its overseas ambitions. Wanda has been among the most aggressive Chinese investors in cross-border real estate deals and during the first half of 2015 also reached agreement on a $361 million acquisition of Australia’s largest theatre chain.
And Wang has still more big plans for going global. Wanda set the goal this week of becoming “a leading international brand,” and already projects that for 2015, 30 percent of its revenue will come from overseas.
Besides the Aussie cinema deal, Wanda’s $2.5 billion in acquisitions so far this year include buying a sports marketing firm belonging to the nephew of disgraced FIFA leader Sepp Blatter for $1.16 billion, and putting down $576 million domestically to acquire online tourism ticket platform LY.com.
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