China’s Dalian Wanda scraps bid for Bandar Malaysia project after regulatory scrutiny at home
Dalian Wanda Group, the troubled Chinese property-to-entertainment giant, has abandoned its bid for the property portion of the Kuala Lumpur-Singapore high-speed rail project, the biggest of its kind in Malaysia, only three months after being considered a front runner.
The multibillion-dollar Bandar Malaysia property development project has received nine pitches on how to develop the 197-hectare site, according to a report Tuesday by the Straits Times, which cited Malaysian government officials.
Wanda, which was reported in May to be in the running for the project, was not included among the list of candidates that had submitted proposals to Malaysian authorities, according to the Straits Times report. Seven Chinese and two Japanese firms were cited as applicants to become master developers of the project.
Malaysian Prime Minister Najib Razak met with Wanda’s founder Wang Jianlin on May 13 in Wanda’s Beijing headquarters, when he led a delegation to attend China’s Belt and Road Forum. Najib at the time praised Wanda’s ability to bring “something extraordinary” to Bandar Malaysia. But after returning to Malaysia, he said that the development model would change, with the ministry retaining ownership of the land and with the possibility that more than one Chinese entity would be involved.
Wanda’s official website said Wang met Najib, without mentioning the project.
Wanda declined to comment when contacted by the South China Morning Post on Tuesday about the status of its bid for Bandar Malaysia.
The Bandar Malaysia project, owned by state fund 1Malaysia Development Berhad (1MDB), had originally been awarded to China Railway Engineering Corp (CREC) and its Malaysian partner, Iskandar Waterfront Holdings (IWH), in December 2015. The joint venture’s alleged failure to meet key conditions under the transaction, among other things, prompted the Malaysian government to unilaterally cancel the contract in May. The rail project, valued at US$5.2 billion, is part of Beijing’s Belt and Road infrastructure development push.
The Strait Times said senior Malaysian government officials acknowledged that they held preliminary talks with Wanda on the project, but later decided to widen their options by calling for international proposals on how to proceed with the development.
On Friday Wang Jianlin vowed to shift his investment focus “mainly in China”, following revelations that Chinese regulators had instructed the country’s largest lenders to cut funding for six of the company’s overseas acquisitions. The Bandar Malaysia project was not among the six that lost funding support.
This is believed to contribute to Wang’s decision in early July to sell-off the majority of his hotel and theme park holdings.
Wanda is among five Chinese private companies to be targeted by regulators amid a crackdown on overseas acquisitions.
Separately, mainland Chinese media reported on Tuesday that Wanda is quietly selling off its Wanda plazas – the 200 or so shopping malls that have become its main domestic assets after the group sold 13 theme parks and 77 hotels. That fuelled speculation that Wanda was still short on liquidity even after recovering 63.7 billion yuan in cash from asset sales.
Wanda responded Tuesday afternoon, saying this was not an asset disposal, but implementation of its “asset-light strategy”. The ownership transfer of three Wanda Plazas in Nanchang, Yancheng and Liaoyang, is part of the previously completed agreement in which Wanda would transfer the plaza to other landlords upon completion of the projects.
The company said in its half-year report that it would boost the number of plazas
under such agreement – in the first half all 26 new plazas fell into this category.