Pan Shiyi, Zhang Xin Resign as Chairman, CEO of Developer Soho China

Chinese billionaire couple Pan Shiyi and Zhang Xin have resigned as chairman and chief executive of Soho China, taking one step back from the company they founded as it continues to face controversy linked to their failed $3 billion sale of Soho to Blackstone.

Pan has also resigned as chairman of the nomination committee and chairman of the board’s ESG committee, in order to focus on supporting the arts and philanthropic pursuits, said Soho China in a filing to Hong Kong stock exchange Wednesday.

His wife and Soho chief executive, Zhang Xin, has also stepped down with the same rationale of focusing on “supporting the arts and philanthropic pursuits”, according to the company’s statement. Both Pan and Zhang will remain executive directors on the board.

The resignations take effect from Wednesday and come exactly two months after the company disclosed that their CFO, Ni Kuiyang, was under investigation for insider trading in the developer’s Hong Kong-listed shares, which is said to be linked to their aborted Blackstone transaction.

Keeping Their Seats and Shares

While the couple is giving up their titles, they appear to be holding onto their equity, with Zhang and Xin jointly owning 63.93 percent of the Hong Kong-listed company as of 30 June, according to Soho China’s interim report. The real estate tycoons jointly took the 302rd rank on the Hurun China Rich list for 2021, with total wealth of RMB 22 billion ($3.15 billion).

Soho said Huang Jingsheng, an independent non-executive director, has been appointed as non-executive chairman, replacing Pan. Huang, aged 65, has been on Soho’s board since 2018 and comes from a venture capital and private equity background. Previously the executive had served in top positions at TPG Growth, RMB Funds, Bain Capital LLC, and SoftBank Asia Infrastructure Fund.

Xu Jin and Qian Ting, long-time members of the Soho team, have been named co-CEOs, succeeding Zhang. Xu, aged 50, has been with Soho China since 2001 and formerly served as the firm’s vice president overseeing assets and property management. Qian, aged 45, joined Soho China in 2002 and was previously the firm’s VP overseeing property leasing and sales.

Shares of Soho China climbed by 11 percent in Hong Kong on Wednesday and closed at HK$1.51 (US$0.19).

In Beijing’s Crosshairs

Soho, founded in 1995, prospered in China’s boom years by initially focusing on developing commercial properties for strata (unit by unit) sale skinned with trend-setting designs by celebrity architects like Zaha Hadid. The company, which built a portfolio of office properties in Shanghai and Beijing, raised $1.9 billion in its Hong Kong initial public offering in 2007.

In more recent times, however, Soho China, has shown signs of having fallen afoul of the authorities.

Last September, Blackstone abandoned its $3 billion buyout of Soho China after failing to win approval from the mainland’s anti-monopoly regulator. Soho China shares sunk as much as 40 percent immediately after Blackstone scrapped the buyout.

Then in October, the Beijing Municipal Taxation Bureau said it was inspecting a Soho subsidiary in the city for tax evasion.

The Shanghai Municipal Market Supervision and Administration Bureau said in December that it had fined units of Soho China a total of RMB 86.64 million ($13.6 million) for gouging tenants on electricity charges in most of the buildings the developer owns in Shanghai.

In July, Soho China confirmed that its chief financial officer, Ni Kuiyang, was under investigation for insider trading in the developer’s Hong Kong-listed shares.

As the slowing Chinese economy and a series of regulatory curbs to restrict lending have rippled across the once-hot real estate market, Soho China ran a “clearance sale” in July for what it calls “high-quality properties” in Beijing and Shanghai at a 30 percent discount.

Nails That Stick Up

The past two years have held an array of challenges for outspoken entrepreneurs in China, with Alibaba’s Jack Ma having disappeared from public view since the $34.5 billion IPO of Ant Group was shot down at the last minute in November 2020.

In July a number of Ant Group executives stepped down from their roles at Alibaba and the Wall Street Journal reported days later that Ma will cede control of the fintech giant.

Real estate tycoon Ren Zhiqiang was sentenced to 18 years in jail in September 2020 after criticising the government and financier Xiao Jianhua was sentenced to 13 years in jail last month after a mysterious five-year disappearance.

There has also been a series of top tech entrepreneurs stepping away from public leadership roles at their companies as Beijing cracks down on the sector.

Richard Liu, founder of JD.com, Zhang Yijing, founder of TikTok-owner ByteDance, Su Hua, founder of TikTok’s main rival Kuaishou, and Colin Huang, founder of popular e-commerce platform Pinduoduo, have stepped down from top positions in the past 18 months.

Many of these abdicating executives have said they would focus on philanthropic or scientific research causes after stepping away from their companies.

Pan and Zhang now seem to spend most of their time in the U.S. After the Blackstone deal fell through, photographs of the couple in the stands at the US Open tennis tournament in New York circulated widely on Chinese social media.