Billionaire's gamble on distressed US firm reflects growing confidence of Chinese investors
Shanda Asset Management’s active involvement in US companies shows how Chinese investors are stepping up to seek returns by helping to run businesses
Chen Tianqiao has placed one of the biggest wagers of his life. And it may finally be starting to pay off.
Chen, through his Singapore investment firm Shanda Asset Management Holdings Limited, has accumulated a large stake in the struggling Tennessee company Community Health Systems. Between early 2016 when Chen first bought shares of the operator of acute care hospitals, and January of this year, the share price plummeted more than 80 per cent, from US$20 a share to below US$4.
The Chinese billionaire is betting he can catch outsize returns on his investment in the distressed US health care provider when its share price improves. To make sure that happens, his investment firm stated last March it intended “to engage with (Community’s) management team regarding (its) business and operations and the status of the ongoing turnaround strategy.”
This month, Community Health’s shares have staged a 37 per cent recovery, hitting US$5.50 this week. If the turnaround eventually comes to fruition as planned, Shanda, whose 24 per cent stake in Community Health makes it the company’s largest shareholder, stands to gain the most.
“We are happy to see recent Community Health System gains and increased investment from other firms such as BlackRock,” Jason Reindrop, a spokesman for Shanda, told the South China Morning Post. “We support the company and take a contrarian position against prevailing market sentiment when needed.”