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HK regulator said to be holding up Dalian delisting
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A PLAN by China’s richest man, Wang Jianlin, to take his Hong Kong-listed commercial property unit private is being held up by questions from the city’s market regulator, according to company insiders, delaying an announcement on the offer.
Dalian Wanda Commercial Properties, whose shares have been halted since April 25, was expected to publish details of the proposed delisting as early as May 2, said two of the sources with direct knowledge of the plan. They declined to be named as details of the discussions were private.
Wang is planning to delist the Hong Kong real estate vehicle and relist it in Shanghai, hoping to benefit from higher valuations on China’s mainland.
The nature of the questions the Securities and Futures Commission has for the Dalian Wanda Group, the parent of the property unit, and why there was such a delay, were unclear.
The SFC declined to comment, as did Wanda Commercial.
It is not unusual for the SFC to question companies before they delist as buyout offers need regulatory approval.
A person familiar with the situation said, though, that the way the buyout had been structured was rare in Hong Kong and this was causing regulatory headaches.
Dalian Wanda has set up a special vehicle to buy all the shares of the property unit. Investors who wish to own shares in the future mainland-listed company have subscribed for shares in the vehicle in an offer that has been oversubscribed.
They will receive up to 12 percent annual interest on their holdings if the property arm fails to relist in China within two years. Meanwhile, it is unclear what investors in the Hong Kong-listed entity will get.
According to an announcement in March from Wanda Commercial, Dalian Wanda Group was preparing to offer a minimum of HK$48 (US$6.18) a share, the same as the original IPO price in December 2014. But a source said earlier this month that Dalian Wanda was considering offering a 10-20 percent premium on the IPO price in a bid to secure shareholder approval.
Some cornerstone investors in Wanda Commercial’s US$4 billion Hong Kong IPO said they fear they are being treated unfairly in the buyout plan compared with investors who have been wooed to bet on the company’s relisting on the mainland.
Cornerstone investors in IPOs receive guaranteed allocation in exchange for agreeing to retain their stakes for a set amount of time, typically six months.
“They haven’t come to talk to us at all since the delisting announcement,” Timing Investment Chairman Jiang Ming said in a phone interview. The firm, which invests in media, construction and finance, bought US$100 million worth of Wanda Commercial shares as a cornerstone investor in the IPO.
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