Nan Fung eyes expansion of property portfolio in China

Privately run Nan Fung Development has teamed up with Shanghai Industrial Urban Development Group (SIUD) to buy the majority owner of trade exhibitions venue Shanghaimart for US$579.3 million.

The deal marked the Hong Kong-based developer's major investment in Shanghai and the group said it planned to enlarge its investment portfolio on the mainland, even though the market has been weighed by rising housing inventory and sluggish sales.

SIUD is a subsidiary of Shanghai Industrial Holdings, the municipal government's listed investment arm in Hong Kong. SIUD's and Nan Fung's 51-49 joint venture Advantage World Investment has agreed to buy Continental Land Development, which has a 99 per cent stake in Shanghai World Trade, Shanghai Industrial said in a filing to Hong Kong's stock exchange.

Shanghai World Trade owns Shanghaimart, a permanent international trade mart in the Shanghai Hongqiao Economic and Technological Development Zone. Annual revenue of Shanghaimart was about 300 million yuan (HK$378.5 million) and the joint venture expected to increase this to 500 million yuan in the next two to three years, according to SIUD chairman and executive director Ni Jianda.

"We are optimistic about the mainland. We like first-tier cities, especially Shanghai," Nan Fung chief executive Antony Leung Kam-chung said. "Despite some analysts' concerns over the nation's property sector in the short term, we are optimistic about the future and plan to invest in the nation at a larger scale."

Leung, Hong Kong's finance chief from 2001 to 2003, stood down as China chairman at the United States-based Blackstone Group to join Nan Fung as its chief executive in February this year.