Wharf's China spree set to pay off

Wharf (Holdings) is looking forward to reaping the benefits of an aggressive acquisition binge on the mainland that has expanded its land bank to 18 million square metres since 2007.

Last year, the conglomerate accelerated its investment in the mainland by acting as a white knight to rescue financially troubled Greentown China.

Through a deal involving 5.1 billion yuan (HK$6.3 billion) of shares and convertible notes, Wharf will hold a 24.6 per cent stake in the mainland developer that could be increased to 35.1 per cent if it converts the notes.

The equity investment represents a big boost for the Hong Kong conglomerate's presence on the mainland. Previously, Wharf expanded its land bank mostly through mainland government land auctions or tenders. But it added 5.7 million square metres to its land bank after it became the second-biggest shareholder in the debt-laden mainland developer. Wharf, which also owns Times Square in Hong Kong, now has one of the largest land banks of any Hong Kong developer on the mainland.

"We are not chasing to be the largest in terms of size but strictly looking for return," said Wharf deputy chairman and managing director Stephen Ng Tin-hoi. "We will not go for a site if it fails to meet our internal rate of return [IRR]."

He did not disclose Wharf's IRR but said 20 per cent was a basic requirement.