Greentown Chairman Steps Down as CCCC Exerts Control of Hangzhou Developer

Luxury home builder Greentown China Holdings announced late last week that its co-chairman Song Weiping had resigned from the company he founded twenty-four years ago in a move seen as unifying control of the Hangzhou-based developer.

Song, who had sold off what eventually became the largest stake in the company to state-run China Communications Construction Company (CCCC) in 2014, was cited in the statement as indicating that “his resignation can lay the ground for the long-term development of the Group as by furthering the corporate governance and structure and making way for the cultivation of the next echelon of the team.”

With the company’s other co-chairman, former CCCC executive Liu Wensheng also stepping down, Greentown will now be governed by a single chairman, with another former CCCC officer, CEO Zhang Yadong being appointed as the new head of the Hong Kong-listed firm’s board of directors.

Song Leaving Greentown for Good

As part of the management transition for the firm, which had RMB 60.3 billion in revenue last year, Song will cease all duties with the developer, although he will continue to carry the title of Honorary Chairman of the company’s planning and design committee.

Also as part of the transition, two other Greentown executive directors Li Qingan and Li Yongqian, both of whom represented CCCC, have also resigned with effect from the date of the announcement, due to “changes in their respective job arrangements.” The pair were replaced by two new executives from the construction firm, Zhou Lianying and Geng Zhongqiang.

Sixty-two-year-old Song founded Greentown in 1995 and built the company’s reputation as a developer of high end projects, particularly in its home province of Zhejiang and other parts of the Yangtze river delta.

Leadership Turnover Follows Change in Control

However, Song’s aggressive land purchases and rapid expansion drove the company into dire financial straits in 2012, before Hong Kong’s Wharf Holdings took a stake in Greentown and helped to provide financing for new land purchases.

Those financial troubles worsened into virtual bankruptcy in 2014, however, before CCCC took a 24.288 percent stake in the business for HK$6.013 billion in December of that year. That partnership came after Song had first agreed to, and then cancelled, a merger with Sun Hongbin’s Sunac China Holdings.

In May 2015, CCCC paid another $148 million to acquire an additional 4.6 percent interest in Greentown and become its largest shareholder with a total stake of 28.9 percent.

Former Dalian Politician Takes Charge

Song’s successor, Zhang Yadong, was previously a deputy mayor of northern Chinese city Dalian and general manager of China Urban and Rural Construction Development Limited, a wholly owned subsidiary of CCCC. The cadre turned chairman, has been serving as an executive director and chief executive officer of Greentown since August 1, 2018.

Greentown’s former executive director Guo Jiafeng, who left when CCCC took over in 2015, rejoined the board as part of the transition, while Stephen Ng Tin Hoi, representing Greentown’s second largest shareholder Wharf Holdings, was appointed as a non-executive director, and Andrew Chow On Kiu was appointed as an alternate director.

Since December last year Song has been offloading shares in Greentown, gradually selling down his stake from 10.8 percent to 10.35 percent as of May 16, 2019, according to public information.

Song to Focus on Bluetown

As he departs Greentown, Song, in the statement indicated that he will maintain close ties with the company through his role with Bluetown China, a residential project develop which was spun off from Greentown’s construction business in 2016 and is now controlled by Song.

Bluetown focuses on the development of value-added communities, project management, asset management and living services. Last May, Bluetown reportedly signed an agreement with the government of Henan province to invest RMB 20 billion in building a senior care town, with comprehensive services encompassing healthcare, education, culture and tourism.