UBS backed away from US$4.4b Wanda privatisation amid concerns over credit risk profile, FT reports

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Wang Jianlin, chairman of the Wanda Group, speaks during an interview in Beijing, China, August 23, 2016. Photo: Reuters

Published: 10:01pm, 9 Oct 2016Updated: 10:24pm, 9 Oct 2016

Lingering concerns over credit risk prompted UBS to pull out as financial adviser weeks ago to the US$4.4 billion deal that took Dalian Wanda Commercial Properties private, a transaction that the Swiss financial services giant helped initiate, according to a media report.

The property conglomerate, controlled by Wang Jianlin, put its plan back on track with China International Capital Corp, which single-handedly shepherded Hong Kong’s biggest privatisation deal.

Shareholders approved Wang’s share buy-back offer on August 15, which has paved the way for the relocation of the company’s listing from Hong Kong to mainland China.

Citing a senior Wanda official, the Financial Times reported on Sunday that UBS “had become uncomfortable with that deal’s credit risk profile” and backed out of the transaction it had originally proposed ahead of the offer in May.

“That’s why foreign banks are really losing ground on this front,” the FT quoted the Wanda official as saying.

There were no comments from either CICC or UBS.

Under rules in Hong Kong, banks are required to be satisfied with the sources and availability of funds when offers were made, the report said, adding that Wang raised funds from private investors for the share buy-back.