Ping An Insurance becomes top holder of cash-strapped China Fortune Land, raising survival hopes

Name: Tightened regulations among key trends shaping China’s internet in 2021
Uploaded: 2021-09-10T06:34:04.000Z
Duration: 9 min 40 s
Description: Tightened regulations among key trends shaping China’s internet in 2021

China Holdings has been relegated to second largest owner of cash-strapped developer after trimming its stake in a debt restructuring exercise

Ping An Insurance is seen as a passive investor though the stake has become a drag to earnings

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An exhibition booth showcasing China Fortune Land Development’s projects. The developer has become a financial burden on its major shareholders as it struggles to service its debt. Photo: Handout

Daniel Renin Shanghai

Published: 2:34pm, 10 Sep 2021Updated: 5:31pm, 10 Sep 2021

Ping An Insurance (Group), China’s largest insurer by market value, has become the largest shareholder of China Fortune Land Development, raising hopes the developer will survive its liquidity crisis following a debt default.

The group overtook China Holdings as the single largest holder of the cash-strapped developer after the latter trimmed its ownership to 24.92 per cent from 25.82 per cent in a debt restructuring exercise, according to a Shanghai Stock Exchange filing late Thursday. The Ping An group and its concerted parties own 25.19 per cent of the developer.

“So far, it has only symbolic value as Ping An is China Fortune’s No 1 investor,” said Ivan Li, fund manager at Shanghai-based Loyal Wealth Management. “Investors may hope Ping An will play a bigger role in rescuing the developer. The outlook remains unclear.”

China Fortune climbed for a fourth day, capping a two-week rally of 4.2 per cent to 4.18 yuan. The stock has slumped 68 per cent this year.

The investment in China Fortune Land has become a burden for the insurer as the industrial estate operator and developer struggled to service its debt, having accumulated 81.57 billion yuan (US$12.7 billion) in overdue interest and principal on bank loans and bonds at the end of July.

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Tightened regulations among key trends shaping China’s internet in 2021

The developer failed to pay more than 11 billion yuan of debt in February, including US$530 million of bonds, becoming the first victim of Beijing’s tough “three red lines” measures to rein in excessive leverage among the nation’s developers and prevent a financial shock in the economy.