Hong Kong’s third richest family set to complete NWS takeover deal after New World Development shareholders approve
- New World Development will receive HK$21.75 billion (US$2.8 billion) from the disposal of more than 2.38 billion shares in NWS Holdings
- Buyout by family led by billionaire Henry Cheng will ease the debt burden of the developer, which will pay a special dividend of about HK$4 billion
NWD will receive cash proceeds of HK$21.75 billion (US$2.8 billion) from the disposal of more than 2.38 billion NWS shares, which accounts for about 60.86 per cent of the issued shares, the company announced.
The company will use a portion of the cash proceeds to pay a special dividend of about HK$4 billion, or HK$1.59 per share, it added.
The disposal will “generate immediate value for shareholders, repositions the company around its property businesses, and supports its broader efforts to reduce leverage in the expectation of persistently high interest rates”, the company said.
“This transaction will streamline NWD’s business and asset portfolio, bringing its future earnings and cash flow profile into greater alignment with its property businesses.”
Assuming the NWS share offer is declared on November 9, NWD expects to receive the payment for the disposal by November 20 and to distribute the special dividend on December 20, the statement said.
The deal’s approval “should help ease investors’ concerns about its (NWD) liquidity,” according to a note by CGS-CIMB Securities, which has a “buy” rating on the developer’s shares with a target share price of HK$19.30, implying an upside of around 26 per cent from the current levels. NWD shares gained nearly 4 per cent to HK$15.46 on Friday. NWS Holdings rose more than 1 per cent to HK$9.41.
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Chow Tai Fook Enterprises holds about 45.24 per cent of NWD shares as of Thursday.
NWD’s total borrowings including loans and bonds stood at HK$185.3 billion as of end-June, while it had total cash of HK$54.5 billion, according to the company’s annual report.
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Its net profit slumped 28 per cent to HK$900.9 million in the 2023 financial year, according to its annual report issued in September.
As one of the most indebted developers in Hong Kong, NWD said it expects its net gearing of around 47 per cent to fall to around 42 per cent after the sale, according to a previous filing. Its peers average about 20 per cent.
Forbes estimates the Cheng family’s net worth at US$28.9 billion, trailing Henderson Land scion Lee Shau-kee’ US$30.3 billion fortune and “Superman” Li Ka-shing’s US$39 billion.
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The Greater Bay Area (GBA) and the Yangtze River Delta markets contributed 91 per cent of NWCL’s revenue in this period, a positive development for its Hong Kong-based parent, which has about 21 per cent of its total assets deployed in the GBA development zone.
