China Minsheng Jiaye will consider inject asset into its controlled SRE

PUBLISHED : Thursday, 07 January, 2016, 7:29pm
UPDATED : Thursday, 07 January, 2016, 7:33pm

China Minsheng Investment, the mainland’s largest private investment fund, will consider injecting assets into SRE Group in which its property unit became a controlling shareholder last month.

The asset-injection plan was unveiled Thursday when China Minsheng Jiaye Investment (CMJI), a wholly owned subsidiary of China Minsheng Investment, pledged its support to SRE Group and appointed a new management team to lead the firm’s reform and development.

Cheng Donghui, chief executive office of CMJI, which holds a 60.78 per cent in SRE, said the proposed asset injection would “optimise the SRE’s asset and capital structure, which will make its business stable and sustainable.”

CMJI is pursuing its development strategy of “industries and finance integration” with emphasis on investment in the property sector, he said.

Last month, CMJI completed the acquisition a 60.78 per cent equity interest in SRE group for HK$1.25 billion by subscribing for new shares at 10 Hong Kong cents each.

Chairman He Binwu said SRE currently own a land bank of 3.5 million square meters.

With the entry of a controlling shareholder, he expects CMJI would eventually inject its 1.2 million square metre site in Dongjiadu, Shanghai.

In 2014, a consortium formed by China Minsheng Investment and Shanghai Bund Investment Group won rights to the multi-use site located South of the old Bund for 24.85 billion yuan (HK$29.22 billion).

SRE plans to diversify into property projects featuring medical services or elderly-care services that target wealthy group, He said.

“In Shanghai alone, the population of individuals aged 65 or above has reached 3 million. But most elderly homes are located in rural areas requiring about one or two hours driving time from the city centre. If we can build a project with co-operation with a hospital in an urban area, it will definitely be attractive to well-off retirees such as senior executives, doctors or artists,” said He.

SRE will also seek opportunities to invest in overseas property projects in line with CMJYI’s strategy to go global, he said.

“We are aiming at gateway cities London, New York or Singapore,” He said.

The company’s executive director Zhao Xiaodong said debt denominated in US dollars accounted for a small fraction of its total debt, which means its exposure to currency risk, in the form of further slide in the yuan, is limited.

“Considering the volatile yuan currency against US dollar, we will consider a structural change in our offshore loan that will benefit us most,” Zhao said.

SRE’s debt amounted to HK$19.17 billion as at June last year.

The firm said it would also leverage the internet to start online-to-offline, or “O2O” property management services.

SRE’s Hong Kong shares tumbled 7.5 per cent to close at 31 Hong Kong cents on Thursday.