Vanke plans purchase from Blackstone

Vanke Co Ltd, China's largest residential developer, is planning with its partners to acquire a commercial property unit from US firm Blackstone Group LP, triggering speculation whether the move is linked with an ongoing power struggle within the company.

In a filing to the Hong Kong Stock Exchange on July 11, the developer said that along with partners it has agreed to set up an acquisition fund to acquire 96.55 percent of a commercial property company affiliated with Blackstone for 12.87 billion yuan ($1.92 billion; 1.72 billion euros).

Vanke will contribute 3.89 billion yuan, and no securities will be issued to fund the deal, according to the statement.

While the deal has gained approval from the board of directors, the developer said it has not entered into any legally binding agreement with the involved parties. It did not identify its partners either.

The announcement of the deal comes amid a corporate power struggle between Vanke's largest shareholder, Baoneng Group, a private insurer, and its management team led by its founder and chairman Wang Shi.

Some observers have speculated that the management team could leverage the deal to prevent Wang from losing control of the company.

Vanke said in the statement that the deal with Blackstone is aimed at strengthening the company's operations and management capability for commercial properties.

Gao Jianfeng, a property analyst at Nomura Securities in Hong Kong, says there may not be any direct connection between the deal and the corporate power struggle at Vanke. "The transaction looks like a normal one judging from the available information. It's in line with Vanke's business strategy," Gao says.

Blackstone and Vanke did not immediately reply to requests for comment.

Vanke's A shares declined 0.82 percent on July 12 to close at 18.12 yuan. The decline extended total losses to 25 percent since its stock resumed trading last week after a six-month suspension.

The deal with Blackstone first attracted attention after an independent board member of Vanke abstained from a key vote, citing a conflict of interest on an asset-restructuring plan with subway builder Shenzhen Metro Group.

The plan would allow Vanke to acquire assets from the latter through new share issuance, which would make Shenzhen Metro the largest shareholder of the developer.

The deal has faced strong opposition from Baoneng and the state-owned China Resources (Holdings) Co Ltd, the second-largest shareholder in Vanke, as it will significantly dilute its shareholding.

lixiang@chinadaily.com.cn

(China Daily Africa Weekly 07/15/2016 page24)