Singapore-based warehouse operator Global Logistics Properties (GLP) has acquired a 10 percent stake in Beijing Vantone Real Estate Co Ltd for RMB 822 million ($122 million), according to a statement filed with the Shanghai stock exchange.
Under the terms of the deal, GLP Capital Investment 4 (HK) Limited, a private equity unit of the logistics real estate giant, will acquire 205 million A-shares in the Shanghai-listed developer from its second-largest shareholder, Vantone Holdings, at a price of RMB 4 per share. The transaction will give the warehouse builder a 10 percent stake in the 25-year-old developer.
The share sale, which Vantone say will help to ease financial pressure on the developer, comes after GLP had extended short term loans to the developer with Vantone shares as collateral.
GLP Becomes Vantone’s Third-Largest Shareholder
Following the transaction, GLP will be Vantone Real Estate’s third-largest shareholder, after Jiahua Oriental Holdings, which is controlled by Vantone Real Estate chairman Wang Yihui, and Vantone Holdings, which is also controlled by Wang. Jiahua’s stake in Vantone Real Estate is 35.66 percent and, after the share sale, Vantone Holdings will own 20.30 percent of the listed developer. Together, the two holding companies will still control 55.96 percent of Vantone Real Estate.
Upon the successful transfer of the shares, GLP will have the right to nominate at least one person independent non-executive director to the board of Vantone Real Estate, with that director also recommended to act as chairperson of the board’s strategy committee.
According to local media reports, GLP said via a spokesperson that the strategic investment in Vantone is an endorsement of Vantone’s future development and investment value, with representatives of the firm managed by Chinese-American businessman Ming Z. Mei indicating that GLP will actively support Vantone’s operation and management.
Vantone explained in the statement to the stock exchange that bringing on board GLP as a strategic investor would facilitate the company’s long-term development amd protect the interests of the shareholders while the investment lowers the company’s debt ratio.
Bail-Out Follows 43% Drop in Cash Flow
According to Vantone’s financial report, in the first three quarters of 2018, the company had a net cash flow of RMB 275 million, representing a year-on-year decrease of 46.14 percent. During the same period, the developer’s debt increased 29.35 percent to RMB 4.65 billion.
Vantone’s current assets amounted to RMB 8.11 billion in the first three quarters of 2018, a 20.66 percent decrease from the same period of the previous year. Among its total current assets, the inventory value stood at RMB 4.5 billion, down 32.87 percent from the end of 2017.
Prior to the share sale, on November 23, 2018 Vantone Holdings had pledged 172 million shares in Vantone Real Estate to GLP as collateral for a six month loan and on January 21 had borrowed against another 54 million shares in return for an additional six month loan. The pledges in total accounted for 11 percent of the total shares in Vantone Real Estate.
Last October, Vantone also sold its remaining stake in a Beijing CBD project to GLP for RMB 758 million. The 10,490 square meter Z3 parcel, one block from the newly completed Beijing Citic Plaza (China Zun) in Chaoyang district, was won by a Vantone-led consortium for RMB 2.52 billion in 2010. Due to changes in land use planning and other challenges, Vantone which originally held a 35 percent stake in the prime project, never completed preparation of the site to start construction, Before selling off its remaining stake in the Z3 project last year, Vantone had been forced to sell off 97 percent of its shares in the project to five investors for a total of RMB 1.2 billion.
Industrial giant GLP was delisted from the Singapore Exchange in 2017 after a private equity consortium led by Chinese real estate developer Vanke paid $2.45 billion to acquire a 21.4 percent stake in the company.