Chinese property managers replenish cash, eye M&A targets as coronavirus spurs industry consolidation

Hong Kong-listed firm has raised cash to seek acquisition targets in eastern mainland provinces and Greater Bay Area cities

Industry consolidation to accelerate amid pandemic, with about one fifth of companies expected to control 80 per cent of the market, CEO says

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Demand for property management services is set to increase to prevent the coronavirus from spreading in residential and commercial buildings. Photo: SCMP Handout

Published: 4:15pm, 29 Jul 2020Updated: 4:55pm, 29 Jul 2020

The wobble in China’s economy is fuelling expectations that a shakeout will present opportunities for acquisitions and takeovers for some of the nation’s biggest property management companies, an industry executive said.

Several industry players have boosted their financial firepower this year by raising cash from stock placements to pick up targets. Hong Kong-listed Ever Sunshine Lifestyle Services Group does not want to miss the boat, chief executive officer Zhou Hongbin said.

“We want to seek M&As opportunities in this window, which will quickly disappear after the pandemic [in mainland China] is over,” he said in a phone interview on July 21. The firm is eyeing potential targets in eastern provinces and the Greater Bay Area, he added.

The Shanghai-based company, which is controlled by developer CIFI Holdings and other related parties, is ranked 12th in its business, based on its contracts to manage and service about 111 million square metres (1.2 billion sq ft) of commercial and residential properties in 78 mainland cities at the end of 2019.

Zhou Hongbin, CEO of Ever Sunshine Lifestyles Services Group. Photo: SCMP Handout

Ever Sunshine raised net proceeds of HK$1.56 billion (US$201 million) from the sale of 134 million new shares in June. At least six of its peers have also tapped the capital markets, raising a combined HK$7 billion through share placements so far this year, according to exchange data.

For example, Times Neighborhood collected HK$779.6 million by issuing 77 million shares on July 20. Greentown Service raised HK$4.1 billion in total from two share placements in May and June.