Dalian Wanda seeking to boost status
Yet another mainland property developer is seeking a back-door listing in Hong Kong in a bid to ensure sufficient financial strength and enhance its international brand status.
Hengli Commercial Properties on Wednesday said mainland-based Dalian Wanda Commercial Properties would buy a 65 per cent stake in Hengli from its chairman and controlling shareholder, Chen Changwei, at a total cost of HK$675 million.
Dalian Wanda Commercial Properties is controlled by the Dalian Wanda Group, one of the biggest commercial property developers on the mainland.
The group is headed by the country's third-richest man Wang Jianlin.
Born in 1954, Wang joined the army in 1970 and left in 1986. Since 1989, he has been chairman of Dalian Wanda.
The announcement of the stake purchase triggered a near fivefold rise in Hengli shares on Wednesday when they resumed trading. The stock fell 1.03 per cent to HK$1.93 yesterday.
Analysts said the back-door listing would make Wanda's dream of gaining a listing status come true.
"Wanda has been planning an A-share initial public offering for years," said Alan Jin, an analyst at Mizuho Securities Asia. "It's unlikely the regulatory body will open the initial public offering gate for developers soon. Seeking a Hong Kong listing is a natural alternative."
Founded in 1988, the Wanda group operates commercial properties, luxury hotels and department stores. It now operates 55 Wanda Plazas, 34 five-star hotels, 814 cinema screens, 46 department stores and 51 karaoke outlets across the country, the company says in its website.
"Wanda is probably the best home-grown commercial developer in China. Its flagship projects under the brand 'Wanda Plaza' have mushroomed across major cities," Jin said.
Wanda Plaza projects are called "urban complexes" as they consist of commercial properties - hotels, retail outlets and offices - and residential space, he said.
The group has assets of 250 billion yuan (HK$313 billion) and annual income of 140 billion yuan, according to its website. It aims to increase its assets to 300 billion yuan and income to 200 billion yuan by 2015.
Wanda has also expanded into the overseas market. In September last year, it completed the purchase of AMC Entertainment for US$2.6 billion, making it the world's largest operator of cinemas. It has been rumoured that it is also looking to buy a European cinema chain.
Lee Wee Liat, the head of property research at BNP Paribas Securities (Asia), said Wanda would probably inject some commercial property projects such as retail centres into Hengli.
Jin said fundraising was one sure reason for the back-door listing.
"The cheap funding available in the Hong Kong market is quite attractive for developers, although Wanda is quite strong in terms of market position and cash flow," he said. "Seeking a Hong Kong listing is not only for tapping cheap money, but also for broadening the investor base and heightening brand status, as well as facilitating international expansion."
He expects more mainland companies to list in Hong Kong through initial public offerings or the back door.
Last year, China Vanke, the country's largest listed property developer in terms of sales, bought a 74 per cent stake in Winsor Properties for HK$1.08 billion.
In July, Cofco (HK), a wholly owned subsidiary of the mainland food giant China National Cereals, Oils and Foodstuffs Corp, said it would acquire a 73.5 per cent stake in Parkview, in a bid to turn it into a listing vehicle for Cofco's property businesses.