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Mergers & Acquisitions

Wanda drops £470 million London purchase after state instructions on acquisitions

PUBLISHED : Tuesday, 22 August, 2017, 12:25pm
UPDATED : Tuesday, 22 August, 2017, 6:13pm

Dalian Wanda Group, magnate Wang Jianlin’s sprawling property conglomerate, has backed away from its third overseas acquisition in less than a year, taking the cue from last week’s government instructions directing Chinese companies’ outbound investments.

Wanda wasn’t the buyer of the 10-acre plot of land in London’s Nine Elms district that Vinci St Modwen sold for £470 million (US$593 million), according to a statement.

“The buyer is another company. Not Wanda,” Wanda said in its statement, without elaborating. Guangzhou R&F Properties and CC Land Holdings have bought the plot from Wanda, Bloomberg reported separately, citing R&F’s corporate finance director Michael Lee.

Vinci St Modwen, a venture between St Modwen Properties Plc and Vinci Plc, said on June 22 that it had exchanged contracts with Wanda Commercial Properties Hong Kong Co. Ltd. to sell its interest in the Nine Elms Square site, on which Wanda was aiming to develop about 1,900 homes, retail stores and leisure units near Battersea Power Station.

Read: China puts Wanda under spotlight, closes off loan options

Wanda’s bonds and stock prices plunged following the June announcement, setting in motion a series of regulatory scrutiny and checks on the company’s borrowings, ultimately leading to the largest disposal of real estates in China to finance the conglomerates loans. Wanda sold its hotels and theme parks for US$9.5 billion last month.

Under mounting pressure, Wanda’s founder and chairman Wang said in July that he will “echo central government’s call” and keep his investment “mainly within China”.

Nine Elms wasn’t the sole acquisition dropped from Wanda’s overseas shopping list. The company also abandoned its bid to develop the 197-hectare Bandar Malaysia, the largest real estate development in Kuala Lumpur,

Read: China’s Dalian Wanda scraps bid for Bandar Malaysia project

The overseas investments of Chinese companies must align with the country’s national interest, eschewing acquisitions in real estate, hotels, casinos, entertainment and sports clubs, according to a joint statement last week from the National Development & Reform Commission, Ministry of Commerce, People’s Bank of China, and Ministry of Foreign Affairs. Although the guideline lacks the specificity on how to implement the ban, it hammered home the final nail in the coffin of an overseas property shopping spree that had already waned in the first-half.

Read: China firms lose appetite for Hong Kong assets after Beijing tightens capital controls

This is the second time since July that R&F has come to Wanda’s aid, following a 19.9 billion yuan (US$2.9 billion) purchase last month of 77 of Wanda’s hotels across China.

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