Joy City Property Eyes $370M Share Buyback in Bid to Privatise Mainland Builder

The board of Joy City Property on Thursday proposed a HK$2.93 billion ($370 million) buyback of the mainland commercial developer’s shares as part of a plan to take the Hong Kong-listed company private.

Joy City would be wholly owned by its state-run parent organisation, COFCO, upon completion of the buyback, according to a filing with the Hong Kong stock exchange. The proposal remains subject to various conditions including shareholder approval.

The scheme would see the company purchase nearly 4.73 billion shares at HK$0.62 each and delist from the HKEX. Joy City’s stock closed 46 percent higher Friday at HK$0.54 as trading resumed after a two-week pause.

“Given the limited trading liquidity of the shares, investors face challenges in executing substantial on-market disposals at favourable prices, which may result in a discounted exit value due to share illiquidity,” said chairman Yao Changlin. “The proposal provides an attractive exit opportunity for scheme shareholders without having to suffer from illiquidity discount.”

Simplified Structure

Joy City said going private would offer the company more flexibility for long-term strategic decision-making, unencumbered by the current structure in which the builder is controlled by a separate Shenzhen-listed shareholder, Grandjoy Holdings Group.

“This will free business strategies, major investments, and capital operations from board and/or shareholder approvals under Listing Rules, shortening decision cycles, improving operational efficiency, and reducing costs,” Yao said.

The proposal provides shareholders a chance to realise a premium on their investment after the stock has traded at a discount to net assets per share with low liquidity in recent years, restricting Joy City’s ability to raise capital, according to the filing.

The cancellation price of HK$0.62 per share represents a premium of 67.57 percent to the closing price of HK$0.37 on 17 July, when trading was halted at the company’s request.

Leadership Transition

A longtime COFCO executive, Yao assumed the chairmanship of Joy City last year, replacing Chen Lang as part of a leadership transition and larger makeover of the board.

Former Joy City chairman Zhou Zheng, who served in the role from 2013 through 2021, was investigated in 2023 on suspicion of serious violations of Communist Party discipline and having committed crimes.

In January of this year, a Chinese court sentenced Zhou to 12 years in prison for bribery, embezzlement and abuse of power, imposing a RMB 700,000 ($95,000) fine.