China Vanke

Vanke board re-election likely to be delayed until at least May

The three-year term of the property giant’s 11 directors expires this month

PUBLISHED : Thursday, 16 March, 2017, 11:53am
UPDATED : Thursday, 16 March, 2017, 10:49pm

The planned re-election of China Vanke’s board of directors this month is likely to be delayed until at least May amid an unsettled fight among shareholders for control of the company.

Meanwhile, Vanke’s second and third largest shareholder, Shenzhen Metro Group and China Evergrande Group announced a strategic partnership on Thursday.

Evergrande said in a regulatory filing late on Thursday that it has irrevocably entrusted the voting rights of its shares in Vanke to Shenzhen Metro for a period of one year.

Vanke, the Hong Kong- and Shenzhen-listed property giant had been scheduled to re-elect all its 11 board members at a shareholders’ meeting after their three-year term expires on March 27.

But the company has not yet issued a notice to the Hong Kong bourse, despite listing rules requiring written notice be sent to all shareholders 45 days ahead of any such meeting.

With the 45-day rule in mind, analysts say the meeting will not be held until May at the earliest.

“It’s likely to be delayed to at least early May,” said Philip Tse, a property analyst at Bocom International.

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

Currently insurance conglomerate Baoneng Group, Vanke’s largest shareholder with a 25.4 per cent stake, and Evergrande with a 14.07 per cent holding, have no seats on the board.

China Resources, formerly the second largest shareholder which this year transferred its entire 15.29 per cent stake to Shenzhen Metro, still occupies three seats.

Tse said China Resources will have to vacate its three seats after March, but he believes Vanke’s management do not want Baoneng to take up any seats as this could open up a new battle for dominance.

Finding alternative directors and communicating with the shareholders takes time, he said.

After Chinese regulators stepped into the takeover tussle late last year and criticised Baoneng and Evergrande’s leveraged buyout activities, analysts expect Vanke’s management and Shenzhen Metro, which is backed by Shenzhen government, to become the eventual winners.

In the latest move, property developer Evergrande and subway operator Shenzhen Metro agreed a strategic partnership that they will cooperate with each other in urban development and transportation.

Evergrande’s Vanke shares face a lock-up period of six months during which it cannot sell its shares until this May.

Still, the 16-month battle for control of Vanke is not over yet.

Baoneng is “eager” to put people on Vanke’s board, China Business Network reported on Thursday. It is eligible for three board seats based on its holdings, CBN said, citing a mainland professor.

And Anbang Insurance Group, which holds 6.2 per cent in Vanke, also pursued one seat on the developer’s board, financial news site Caixin reported.

A Vanke board office spokesman told the Post that the meeting will not be held in March, but she had no idea about the exact meeting date.

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Little-known Baoneng unexpectedly snapped up more than 20 per cent of Vanke’s shares in late 2015, and last year proposed kicking out all the company’s directors, including founder and chairman Wang Shi.

Baoneng was recently condemned by Chinese regulators for funded the purchase of 43 billion yuan of Vanke’s shares through insurance premiums generated by its subsidiary Foresea Life’s universal life insurance product.

The tussle for control of Vanke has gripped the nation with its twists and turns and prompted the authorities to examine the funding of leveraged buyouts.