China’s largest property developer by sales will finally be listed on a mainland exchange after Greenland Group received approval last week from Chinese authorities to inject assets into Shanghai Jinfeng Investment.
The backdoor listing will create China’s largest listed real estate developer by sending RMB 65.5 billion of Greenland’s assets into the Shanghai-listed company in return for 11.3 billion new shares of the listed company, valued at RMB 5.58 per share, according to a report in the South China Morning Post.
While not immediately raising new cash for Greenland, which is among China’s most aggressive overseas real estate investors, the listing should provide the state-owned enterprise with greater flexibility in raising new funds in the future.
Shanghai Listing Has Been Long Awaited
Greenland’s proposal to use Jinfeng as a listing vehicle was approved by China’s Securities Regulatory Commission on Thursday, but had been anticipated since Jinfeng announced the proposed asset swap in March of 2014.
The Shanghai developer gained its first listed presence in 2013 by purchasing 60 percent of Hong Kong-listed SPG Land Holdings for HK$3 billion. The company was since renamed Greenland Hong Kong Holdings Limited, but has primarily been used for raising debt financing.
The back-door listing comes as China’s government has been encouraging more interest in the country’s stock exchanges, and Greenland could be set to benefit from an equities boom that has sent the Shanghai Composite Index up 121 percent over the last 15 months.
Greenland Raising Money to Fuel Expansion
For Greenland, the stock listing could also be an important means for new funding to support its expansion.
The Shanghai government-owned developer displaced China Vanke as the country’s biggest real estate company by sales last year, to a large extent based on its overseas projects. During the past two years the company has taken on new developments in London, New York, Los Angeles, Sydney and Melbourne, among other locations.
In addition to the stock listing, Greenland has turned to Internet investment funds to raise new cash. The company’s newly formed Internet finance division successfully raised RMB 200 million ($32 million) in 30 minutes earlier this month by offering a wealth management product to investors via Alibaba’s Ant Financial service.