Wanda wants US$5b from single buyer for five offshore assets as China reins in investments abroad

Chinese conglomerate Dalian Wanda Group, once a serial acquirer of overseas assets, is offering to sell all five of its large-scale projects in Britain, the US and Australia to a single buyer for an estimated US$5 billion, as Beijing tightens control over companies’ offshore investments.

It is the latest move by Wanda, owned by billionaire Wang Jianlin, to offload assets as the central government ramps up pressure on the company to curb offshore expansion and reduce its debt levels.

China has been urging mainland firms to exercise caution in their offshore deal making. The government has imposed controls over outbound investment in property, hotels, entertainment, sports clubs and the film industry.

Potential investors have been approached by representatives of Wanda looking to sell all five projects in one go, according to two people familiar with the matter, who did not wish to be identified.

“They are looking for one buyer who can snap up five development projects in five cities,” said one of the sources.

“That will be a big investment. But basically they intend not to sell the assets at below cost, which is about US$5 billion.”

Wang Jianlin sells most of Wanda hotel and tourism portfolio to rival magnate for US$9.3 billion

The UK project up for grabs is One Nine Elms, a two-tower residential and hotel development currently under construction in London. The US$1 billion development was acquired by Wanda from UK-based Green Property in 2013.

In the US, Wanda plans to sell its Vista Tower, which will be Chicago’s third-tallest building when it is completed in 2020, and a US$1.2 billion luxury condominium and hotel complex near the corner of Wilshire and Santa Monica boulevards in Beverly Hills, California.

Also on the list are Wanda’s Australian assets – the US$1 billion Circular Quay flat and hotel tower in Sydney and the US$900 million Jewel project, where has three towers with 512 flats and a 169-room resort on the Gold Coast.

Wanda did not reply to a request for comment.

Property consultants said Wanda will have difficulty finding just one buyer who can afford all five developments in one go.

Thomas Lam, head of valuation and consultancy at Knight Frank, said that since the asking price is huge there are not many companies who will come forward. “The projects are under construction, so the new owner will need to send its own operational teams to complete the developments.”

Restrictions on money leaving the country might make the deal unappealing to other mainland firms.

“They will find it difficult to channel capital outside China under the existing tightened capital controls,” said Lam. “They may have to devise ways to settle the transaction. The deal structure could be complicated and could possibly involve onshore and offshore assets swap.”

Private equity funds, chasing returns of 10 to 20 per cent, may also not be interested, sources said.

Once renowned for its lavish offshore shopping sprees, Wanda’s foreign assets range from property to cinemas. But it started offloading those assets when – along with HNA, Fosun and Anbang, also major overseas buyers – it found itself under scrutiny amid a government crackdown on money laundering and capital outflows.

It is not immediately clear what Wanda’s plans are for the rest of its businesses.

China’s banking regulator orders loan checks on Wanda, Fosun, HNA, others

Squeezed for finance, Wanda in July agreed to sell 77 hotels to Chinese developer Guangzhou R&F Properties for 19.9 billion yuan and a 91 per cent equity stake in 13 tourism projects to Sunac China for 43.8 billion yuan.

In August, the company pulled out of a deal to buy Nine Elms Square in southwest London for £470 million.

Wang fell three spots to fourth place in the 2017 Forbes China Rich List as his net worth dropped by nearly US$8 billion amid a major restructuring of his company that included asset sales and a lower value for his US movie theatre chain, AMC.

Additional reporting by Zheng Yangpeng and Lam Ka-sing