M&A activity of Chinese property management firms poised to jump this year amid rush to raise much-needed cash

Name: New Evergrande protests amid reports troubled Chinese property giant ordered to raze development
Uploaded: 2022-01-12T03:30:20.000Z
Duration: 1 min 29 s
Description: New Evergrande protests amid reports troubled Chinese property giant ordered to raze development

The number and value of mergers and acquisitions in the property management segment will jump as much as 30 per cent, says CGS-CMBI Securities

Financially healthier developers continue to list their property management arms to pursue acquisitions

3-MIN READ3-MIN

In November, China Vanke said it would spin off and list its property manager, Onewo Space-tech Service, in Hong Kong. Photo: Bloomberg

Iris Ouyang

Published: 11:30am, 12 Jan 2022

The property management units of struggling Chinese developers will engage in more mergers and acquisitions to generate much-needed cash this year, analysts forecast.

Meanwhile, their healthier peers are poised to tap capital markets to raise the funds to buy some of their offloaded assets.

The number of M&A deals and the transaction value in the property management segment will jump at least 20 to 30 per cent year on year, according to Raymond Cheng, an analyst at CGS-CIMB Securities in Hong Kong. The total value of deals more than quadrupled last year from 2020, as distressed developers rushed to free up cash to pay maturing debt.

The rush to generate funds is also evident in the capital markets, especially among the larger players.

01:29

New Evergrande protests amid reports troubled Chinese property giant ordered to raze development

Longfor Group Holdings announced on Friday its plan for a separate listing of its Longfor Intelligent Living unit on the main board in Hong Kong. In November, China Vanke said it would spin off and list its property manager, Onewo Space-tech Service, in the city.

As the property market is entangled in a record slump and liquidity crisis, the acceleration of unit disposals and initial public offerings serve as a vital source of funds both for the seller – usually troubled developers such as China Evergrande Group and R&F Properties – and the buyer.