Sunac China Holdings Ltd. (1918), a homebuilder partly owned by buyout firm Bain Capital LLC, agreed to pay HK$6.3 billion ($812 million) for a 24.3 percent stake in Chinese developer Greentown China Holdings Ltd.
Tianjin, China-based Sunac will buy 524.8 million shares at HK$12 each from Greentown Chairman Song Weiping, Chief Executive Officer Shou Bainian and shareholder Xia Yibo, Sunac said in a filing yesterday to the Hong Kong Stock Exchange. Xia is Song’s wife, Greentown said in a separate statement. The cost of the shares was 56 percent higher than the last closing price.
Greentown, the biggest developer in eastern China’s Zhejiang province, in 2012 sold stakes in nine real estate projects to Sunac for 3.37 billion yuan ($540 million) to repay loans and boost working capital. The two companies jointly bought a property project in Shanghai for 5.68 billion yuan about a year ago from Arch Capital Success Ltd.
“The two companies have a positive track record of cooperation,” Fitch Ratings analysts led by Andy Chang wrote in a report. The deal won’t hurt Sunac’s credit profile because of “sufficient liquidity,” they said.
Greentown shares rose 6.6 percent to HK$8.20 in Hong Kong at the close of trading, the biggest gain since April 8. Sunac shares jumped 8.2 percent to HK$3.81, the largest increase since March 26.
Concerns on the property market is one of the important reasons for the stake sales, Greentown Chairman Song told reporters in Hangzhou today.
Sunac will hold the same size stake as Wharf Holdings Ltd. (4), making both of them the largest shareholders of Greentown, Barclays Plc’s Hong Kong-based analysts, led by Jianping Chen, wrote in a report today. The stakes held by Song and Shou will be reduced to 10.5 percent and 8.1 percent, respectively, the analysts said.
Greentown in 2012 sold HK$5.1 billion of shares and convertible securities to Wharf, one of the biggest landlords in Hong Kong.
Greentown said it will appoint Sunac Chairman and Chief Executive Officer Sun Hongbin as co-chairman and a non-executive director and Sunac Chief Financial Officer Huang Shuping as executive general manager and an executive director.
Song will become co-chairman on completion of the deal and then honorary chairman on March 1, 2015, when Sun will become chairman, Greentown (3900) said.
To contact the editors responsible for this story: Andreea Papuc at email@example.com Tomoko Yamazaki