China’s antitrust regulator starts review of Blackstone’s US$3 billion acquisition of property firm Soho China
- Blackstone was notified last week that the State Administration for Market Regulation had accepted its application for the takeover
- Private-equity firm’s offer represents an about 40 per cent discount on Soho China’s audited book value as of the end of last year
Soho China, founded by husband and wife Pan Shiyi and Zhang Xin in 1995, is a developer of residential and commercial projects. The firm has been investing in office, retail and logistics assets since 2008 and owns about 6 million square metres of property in China. It owns and operates commercial properties totalling 1.3 million square meters, including five office and retail properties in Beijing and four in Shanghai.
Soho China aims for asset-light business model by further selling its properties
Blackstone’s offer to buy Soho China at HK$5 represents an about 40 per cent discount on the developer’s audited book value as of the end of 2020, according to the proposal. On the conclusion of the deal, the US private-equity firm will control the company, while the stake held by Pan and Zhang will be reduced to 9 per cent. The couple will sell 2.86 billion shares, or a 55 per cent stake, for HK$14.3 billion.
The real estate sector is among industries China’s top policymakers have blamed for exacerbating social inequality, widening the wealth gap and hampering quality growth. Property prices have been surging over the past year, fuelled partially by the unprecedented amounts of liquidity unleashed by the central bank to cushion the damage caused by the coronavirus pandemic.
Local governments in top-tier cities such as Beijing, Shanghai and Shenzhen have rolled out a flurry to measures to cool speculation, such as tightening approvals of mortgages and clamping down on practices such as faking divorce to qualify for the purchase of an additional home.