Aberdeen Asset dumps Vanke holdings

One of the world’s biggest investors in developing countries joins others in being spooked by China’s highest-profile corporate battle

PUBLISHED : Friday, 12 August, 2016, 12:22pm
UPDATED : Friday, 12 August, 2016, 12:22pm

Aberdeen Asset Management (AAM), one of the world’s biggest investors in developing countries, has joined others in selling its holdings in China Vanke, as the battle for control of the country’s largest housebuilder rages on.

AAM, which has US$403 billion worth of investment under management, has now sold all its Shenzhen-listed Vanke shares, Bloomberg reported on Friday, after a six-month trading halt was lifted on the stock at the start of last month.

An AAM investment manager cited uncertainty over the developer’s future amid the protracted ownership struggle – ongoing between the company’s three main shareholders and its management – as its reason for the exit.

Before the share trading block was lifted on July 2, many had feared China’s highest-profile corporate battle in recent years would spook investors, and predicted a slump in the company’s share price, considered at the time to be unreasonably high.

Other investment managers and advisers have cut their positions in Vanke’s Shenzhen-traded stock to 7.2 per cent of publicly-reported holdings from 19 per cent in December, according to data compiled by Bloomberg.

The massive exit by institutional investors such as AAM and other retail investors, had driven Vanke’s shares in Shenzhen down almost 30 per cent during July.

Aberdeen has also reduced its holdings of Vanke’s Hong Kong-listed shares in the past month.

The company’s share price, however, has staged a turnaround after rival developer Evergrande – which made a surprise entry into an ownership tussle at the start of the month taking a surprise 5 per cent stake in Vanke – also signalled its ambition to obtain control of another leading Chinese development firm.

After boosting its stake in Shanghai-traded Langfang Development Co to 15 per cent in the past four months, Evergrande, controlled by chairman Hui Ka Yan, said it plans to further increase its holdings and did not exclude the possibility of obtaining actual control of the firm, Langfang said in a filing Wednesday, citing Evergrande’s response to a Shanghai exchange inquiry asking for more disclosure on the purchases.

Evergrande also raised the possibility of participating in the management of the developer, even though it currently doesn’t have a “clear plan” to restructure the company.

Evergrande’s Vanke ambitions, however, remain less clear.

Vanke’s battle for control spilled into the public domain last year when Baoneng Group, an obscure Chinese conglomerate, emerged as the developer’s biggest shareholder.

Vanke chairman Wang Shi publicly decried Baoneng as “unwelcome” and embarked on a plan to sell shares to Shenzhen’s metro operator – a move widely viewed as an attempt to dilute Baoneng’s stake. That plan was met with opposition from another key shareholder, state-owned China Resources Co.