Hong Kong private equity firm GAW Capital in talks to fund Chinese buyer’s HK$15 billion tower deal
- Negotiations between GAW Capital and Chen Changwei to fund acquisition of Cityplaza Three and Cityplaza Four ‘going well’
- Swire Properties, the vendor, needs to approve debt structure
Hong Kong private equity fund GAW Capital Partners is in talks to fund a HK$15 billion (US$1.91 billion) buyout of two commercial towers in the city, after Beijing’s tightened capital controls forced their original mainland Chinese buyer to look for financing elsewhere.
GAW Capital is in talks with Chen Changwei to fund the acquisition of Cityplaza Three and Cityplaza Four in Taikoo Shing on eastern Hong Kong Island. Under a proposed arrangement, GAW Capital will have the right to convert its loan into less than 50 per cent ownership equity in the office towers. The deal also allows it the right to raise its stake and become the largest owner of the towers, according to two sources familiar with the matter.
Hong Kong’s Swire sells two office towers in Cityplaza development for US$1.9 billion
“The negotiations between GAW Capital and Chen are going well. But they still need the vendor’s approval for the debt structure,” said a source.
In June, Henglilong Investments, a privately held affiliate of Chen’s Hengli Group, entered into a sale and purchase agreement with Swire Properties for the latter’s interest in Cityplaza Three and Cityplaza Four for HK$15 billion in cash, in one of the biggest property deals this year.
A spokesperson for Swire Properties declined to comment on the matter on Tuesday.
The towers are grade A office buildings with a gross floor area of 226,060 sq ft and 543,576 sq ft, respectively. The transaction is expected to be completed on April 11, 2019.
The sources said tightened capital controls have affected Chinese buyers’ financing plans and forced them to look for help.