Vanke in Talks for $1.9 Billion of Property From Blackstone

  • Deal was reason for director’s controversial vote abstention
  • Vanke is embroiled in tussle for control by major shareholders

China Vanke Co. and its partners are in talks to pay about 12.9 billion yuan ($1.9 billion) for commercial property from Blackstone Group LP and other parties, a deal that first drew attention last month after a Vanke director abstained from a key vote citing a conflict of interest due to the transaction.

The Shenzhen-based developer will contribute about 3.9 billion yuan to the purchase, Vanke said in a statement issued on Tuesday. Vanke didn’t identify the partners it’s working with, saying only that they were not "related parties" of the company. No securities will be issued to fund the transaction, it said.

Vanke, the nation’s biggest publicly traded homebuilder, is embroiled in a tussle for control with major shareholders amid a share sale that would make Shenzhen Metro Group its largest holder. The potential deal with Blackstone has already been a topic of contention between Vanke and China Resources (Holdings) Co. after the Shenzhen Metro share sale was approved last month by a board vote that excluded an independent non-executive director employed by the New York-based investment firm. 

Zhang Liping, employed by Blackstone, abstained from voting on the Shenzhen Metro proposal, citing that Blackstone and Vanke are in talks about the sale of a commercial property project. China Resources opposed the legality of the vote, saying only members directly affiliated with the companies involved in the resolution -- in this case, Shenzhen Metro -- should be excluded from voting.

The deal with Blackstone is aimed to “rapidly enhance the company’s operation and management capability for commercial properties,” Vanke said in the filing, without providing details about the assets being bought. The company is shifting its primary focus as a homebuilder to a provider of city facilities for citizens’ residential, shopping, vacation and working needs. Vanke’s management has said that transition will be facilitated by the deal with Shenzhen Metro, which will give it properties above the city’s subway lines.

“The deal is in line with the broad direction of the company as they said they’re diversifying,” Jeffrey Gao, a Hong Kong-based analyst at Nomura Holdings Inc., said by phone.

Vanke shares fell 1.1 percent to 18.07 yuan in Shenzhen as of 10:38 a.m. local time, bringing the decline to 26 percent since shares resumed trading on the exchange after a half-year suspension as management mulled a restructuring.

— With assistance by Dingmin Zhang

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