Tencent's investment positive for Wanda - Ben Cavender

Ben Cavender

Dalian Wanda Group’s commercial property arm secured a US$5.4 billion investment from a group led by tech giant Tencent Holdings, a major move for the troubled real estate giant, hoping to get a Shanghai IPO, says business analyst Ben Cavender to Reuters.

Reuters:

The 34 billion yuan deal for a 14 percent stake in Wanda Commercial could also help the unit get back on track with a plan to relist in Shanghai after a bold and ultimately expensive decision to withdraw from the Hong Kong exchange in 2016. 

“From Wanda’s perspective it seems a good deal. They’ve overextended with expansions and acquisitions over the last couple of years,” said Ben Cavender, Shanghai-based principal at China Market Research Group, adding that Wanda Commercial had now become a more “attractive mainland IPO candidate”. 

The stake will be bought from existing investors who had been part of the $4.4 billion buyout fund created for Wanda Commercial’s delisting in 2016. Those investors had been promised up to 12 percent annual interest if it failed to relist in Shanghai within two years. 

The Shanghai IPO has, however, been held up by mainland regulatory measures to tighten liquidity in the real estate sector. Wanda said in a statement that with its new investors it was looking to take the unit public “as soon as possible”. 

The Tencent-led group includes major retailer Suning Commerce Group, e-commerce firm JD.com Inc and rival developer Sunac China, which bought some of Wanda’s theme park assets last year. 

“The tech companies are seen as the darlings of China’s emergence as a global superpower. So, reputation-wise I think this is a good move for Wanda,” Cavender said.

More at Reuters. Ben Cavender is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers' request form.

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Most Chinese firms not ready for major M&A - Ben Cavender

Ben Cavender

The sudden US$9.3 bn restructuring of the Dalian Wanda deals left many observers flabbergasted. Most companies in China simply do not have the experience to execute this kind of large deals, says business analyst Ben Cavender to the BBC.

The BBC:

The restructuring of the deal was "kind of crazy" said Ben Cavender, senior analyst with China Market Research. 

"It is very concerning, and it's very unusual at this late stage to have a $9bn deal, and then to have another deal with another company in place." 

He added Chinese firms were running into trouble because they did not have the due diligence or vetting in place for large mergers and acquisitions. 

"They put out a lot of press, then the regulators realise there's some issues that need to be addressed. I suspect that's what happened here." 

The initial transaction had been a surprise - not least because it represented a U-turn from Dalian Wanda's ambitions to expand in the tourism sector. 

The three Chinese theme parks had only opened in the past year, and were intended to compete with US giant Disney's ventures in the country.

More in the BBC.

Ben Cavender is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers' request form.

Are you looking for more experts on China's outbound investments? Do check out this list.  

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31 Billionaires gather for NPC - Rupert Hoogewerf

Rupert Hoogewerf

Wednesday the annual National People Congress (NPC) gathers in Beijing, and among them 31 billionaires, according to the Hurun Rich List founded by Rupert Hoogewerf in the Hong Kong Standard. The NPC counts close to 3,000 delegates. 

The Hong Kong Standard

The richest person in mainland China, property magnate Wang, shot up to 26th spot on the global list. His net worth doubled over the past year to US$25 billion. He ranked 72nd last year, according to the report. Hurun Report chairman Rupert Hoogewerf said 90 Chinese billionaires held “senior political advisory positions,’’ including 31 delegates to the National People's Congress, and three representatives to the last Communist Party Congress. 

But inclusion on a Hurun rich list can be a mixed blessing for wealthy Chinese, intensifying public and government scrutiny of them and their companies. 

Some have subsequently been investigated or imprisoned, among them Huang Guangyu, named China's highest net worth individual three times, most recently in 2008... 

Dalian Wanda Group Chairman Wang Jianlin ranked the wealthiest in China after he doubled his assets to US$25 billion last year. He took the top spot among 358 other US dollar billionaires in the country, a survey found. 

Wang’s became wealthier as Asia experienced a billionaire boom last year. During the period, more than 200 people from the continent accumulated wealth that passed into 10 figures, the Hurun Report said in its global rich list, AFP reports. A total of 824 Asians were included among the 1,867 named as US dollar billionaires on the list.

More in the Hong Kong Standard.

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