Future Land Development Holdings Ltd. wants to acquire mid-sized insurance firms as the Shanghai-based builder seeks to broaden its funding options through a restructuring of units.
“We are studying investments in insurance companies, banks and the like,” Chairman Wang Zhenhua said in an interview in Hong Kong. “Liquidity from an insurance company can complement any cash-flow shortages or needs in the property business.”
Future Land is joining larger peers such as Country Garden Holdings Co. in seeking tie-up opportunities in the insurance and financial sectors. Country Garden said last month it will sell a stake to Ping An Insurance Group Co., China’s second-biggest insurer, and the two may expand cooperation on financial and asset management businesses.
Any acquisition is still under consideration and the company hasn’t yet found a suitable target, Wang said in the May 21 interview. The developer builds residential and mixed-use developments in Shanghai and smaller cities including Changzhou and Suzhou.
Future Land is in the process of merging two subsidiaries, Jiangsu Future Land Co. and closely held Future Land Holdings, and plans to list the combined company on the A-share market in Shanghai. Its real estate development assets will be held by the Shanghai-traded company, while non-core businesses such as property management are under the Hong Kong-listed holding firm.
“The proposed restructuring may heighten the structural subordination risk that Future Land’s offshore creditors face,” Standard & Poor’s said in a report this month. “However, Future Land has the flexibility to increase dividend payouts and form joint ventures with its A-share subsidiary.”
Future Land’s $350 million 10.25 percent five-year notes rallied 2 cents this month to 102.823 cents on the dollar as of 11:04 a.m in Hong Kong.
The Hong Kong-traded stock has gained 128 percent this year, outperforming the 20 percent gain in the benchmark index.