Wanda chairman Wang Jianlin has been doing some heavy negotiating
Once ranked as China’s richest man, Dalian Wanda boss Wang Jianlin is handing control of the mainland’s largest commercial developer to a creditor group led by Hong Kong private equity shop PAG after losing a bet that he could achieve a Hong Kong IPO this year.
In a statement on Tuesday, PAG said that, together with other investors, it is reinvesting an undisclosed sum in Zhuhai Wanda Commercial Management Group, with the proceeds redeemed from Dalian Wanda in accordance with their earlier investment deal. The deal comes after repeated attempts by Dalian Wanda Group to list its shopping mall unit on the Hong Kong exchange failed to win approval this year.
Under the terms of the agreement, Wang will see his stake in the company he built into China’s largest mall developer reduced from 78 percent to 40 percent, with the PAG-led investor consortium holding the remaining 60 percent. Backers that provided funding in August 2021 to help Wang bring Zhuhai Wanda to market include Chinese developer Country Garden and state-backed investment manager CITIC Capital, as well as mainland tech giants Tencent and Ant Capital, in addition to PAG.
PAG on Tuesday said its share in the earlier agreement was $2.8 billion out of a total investment of $5.9 billion made by the existing investors. “This new agreement reflects our confidence in Zhuhai Wanda’s growth potential and its management capabilities,” a PAG representative said.
Tripped Up by a Tricky Market
When Wang borrowed RMB 30 billion through the 2021 deal with PAG and team, Dalian Wanda Group and its commercial arm agreed to buy back the pre-IPO shares and compensate for investment returns at an estimated overall cost of RMB 40 billion ($5.6 billion), according to S&P Global Ratings.
PAG co-founder and executive chairman Weijian Shan
As the world’s biggest operator of shopping malls by square footage, Zhuhai Wanda manages malls in 227 cities across China. Over the past two years, the number of malls under management has grown from 417 to 494, with after-tax profit rising from RMB 5.3 billion in 2021 to an estimated RMB 9.5 billion ($1.3 billion) this year, per Wanda’s figures.
Wang saw his fortunes begin to slide following his decision to delist his mall empire from the Hong Kong stock exchange in 2016 in pursuit of what was expected to be a more lucrative listing on a mainland bourse.
Borrowing from investors to finance the $4.4 billion buyout, Wang promised his backers a quick relisting on the mainland, which never happened. Turning attention back to the Hong Kong bourse, Wanda in June made a fourth application to list the mall operator on the HKEX after its third attempt lapsed in April due to failure to gain approval from authorities.
“Dalian Wanda appreciates the trust and support by the investors and will continue to support the development of Zhuhai Wanda,” a Wanda representative said Tuesday.
The major shareholders have pledged to further improve the governance of Zhuhai Wanda, maintain the stability of the management team and jointly support the long-term growth of the business, according to their Tuesday statement.
Offshore Debt Respite
In late November, a Wanda subsidiary gained early consent approval from bondholders to delay by 11 months the payment of a $600 million offshore bond, giving the conglomerate a respite amid its IPO struggles.
Wanda Properties, a unit of Wanda Commercial Management, said creditors holding 99.3 percent of the bonds voted in favour of extending the repayment deadline of the 7.25 percent notes to 29 December 2024 from the already extended maturity date of 29 January 2024, according to a bourse filing.
Wanda Commercial’s debt ratings were downgraded deeper into junk territory shortly after unveiling the restructuring proposal on 21 November.
Wanda’s run of dealmaking continued last week as Wang announced plans to sell his controlling stake in the group’s film business to China Ruyi Holdings for an undisclosed amount. China Ruyi’s buy would give the Tencent-backed media and entertainment firm control of Wanda Film after it acquired 49 percent of Beijing Wanda Investment from Wanda for RMB 2.26 billion ($320 million) in July.
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