China Vanke

Vanke founder Wang Shi to step down as chairman

Decision is a bookend to an 18-month takeover tussle that redefined the rules of corporate China, leading to an overhaul of its insurance industry and even the ouster of the industry’s regulator

PUBLISHED : Wednesday, 21 June, 2017, 11:32am
UPDATED : Wednesday, 21 June, 2017, 11:18pm

Wang Shi, who founded the world’s biggest builder of residential homes, said he’ll step down by the end of June as chairman of the company he founded three decades ago, handing the baton to China Vanke Co’s president Yu Liang.

“I believe it’s the best timing. They are younger, but mature enough,” Wang said in a post on the account of his Wechat social network on Wednesday.

The Shenzhen-based developer is scheduled for its annual shareholders meeting on June 30, when 11 candidates will stand for election to Vanke’s board of directors. Wang will not be among the candidates.

The decision by Wang, 66, is a bookend to an 18-month takeover tussle that redefined the rules of corporate China, leading to an overhaul of its insurance industry and even the ouster of the industry’s regulator.

The battle for Vanke: Wang Shi’s own fight

Vanke shares rose as much as 1.9 per cent in Shenzhen and 2.9 per cent in Hong Kong after Wang announced his decision. Its Shenzhen shares closed 0.05 per cent higher at 21.04 yuan, while those trading in Hong Kong were up 0.72 per cent at HK$21.1.

Wang, an avid mountaineer, marathoner and philanthropist, has established a reputation as the elder statesman of corporate China.

Since October 2015 however, he’d been embroiled in a boardroom tussle fending off a hostile takeover by the insurance-property group Baoneng, an unprecedented feud in the country’s corporate history, which ultimately laid bare governance issues at Vanke for the world to see.

“Wang’s departure is not surprising, the shareholder battle has caused some damage to his reputation,”said David Hong, head of research at China Real Estate Information.

The five things you need to know about the battle of Vanke

The tussle has also drawn the attention of top regulators as Baoneng and another raider China Evergrande Group redirected funds from their insurance units – mostly high-return universal life insurance products – to finance their leveraged buyout attempt of Vanke.

Both Baoneng and Evergrande were investigated and penalised. Xiang Junbo, chairman of the China Insurance Regulatory Commission, has been under investigation for violating party discipline since April.

While Baoneng’s takeover gathered pace, rival developer China Evergrande tried to muscle in on the fight by accumulating stocks from the stock market. Vanke found a white knight in Shenzhen’s subway operator, which came in to buy up the controlling stake and become the largest shareholder of the developer.

China Resources transferred its entire 15.31 per cent holding in Vanke to Shenzhen Metro in January,most recently, China Evergrande Group has agreed to transfer all its Vanke shares to the subway operator.

After the transaction, Shenzhen Metro will surpass Baoneng to become Vanke’s largest shareholder with 29.38 per cent stake.

“Wang basically hasn’t participated in Vanke’s daily operations since Yu took the role of president 15 years ago. I believe the firm will keep its existing strategy,” said Raymond Cheng, a property analyst at CIMB Securities. “But for sure Shenzhen Metro will play an increasingly important role in Vanke.”

Only Vanke’s chief executive Yu and executive vice president Wang Wenjin remain as candidates.

Others include three managements from Shenzhen Metro, Vanke’s Executive Vice President Zhang Xu, Shenzhen SEG Group chairman Sun Shengdian and Qianhai Financial Holdings chairman Li Qiang. There are no candidates from Baoneng Group.