Wang Jianlin has once again defused a potential crisis.
On December 12, the official website of Wanda Group announced that PAG Investment GroupA new investment agreement has been signed with Dalian Wanda Commercial Management Group. Under this agreement, Pacific Alliance will reinvest in Zhuhai Wanda Commercial Management with other investors after the investment redemption period expires in 2021.
This move means that Wanda has successfully lifted the previous gambling crisis. Back in August 2021, 22 investment institutions, including Zheng Yutong family, Country Garden, CITIC Capital, Ant, Tencent and Pacific Alliance Investment Group, jointly injected 38 billion yuan into Wanda Commercial Management, of which Pacific Alliance invested about 2.80 billion US dollars…
The condition of the investment is that if Zhuhai Wanda Commercial Management fails to complete the listing by the end of 2023, 22 investors can ask Wanda to buy back shares at a rate of 8%. This is like a sword of Dascomo hanging over Lao Wang’s head, which may fall at any time.
A person familiar with the matter told ifeng.com’s Eye of the Storm that PAG was the lead agency at that time, and the investment agreements were all drawn up by PAG.
The end of the bet is approaching, and PAG has cleared the thunder buried by himself, and the increasingly thin Lao Wang can finally breathe a sigh of relief.
However, as the shareholding ratio decreases, Wanda’s control over Zhuhai Wanda Commercial Management will inevitably weaken.
Lost nearly 40% of its equity
Seeing the clock ticking at the end of the year, many people were sweating for Wang Jianlin. If the share repurchase clause was touched, it would be a great challenge to the cash flow and reputation of Wanda Commercial Management, but Lao Wang, who had already experienced great storms, temporarily resolved the crisis of Wanda Commercial Management in an unexpected way.
According to the latest agreement announced by Wanda Group, Dalian Wanda Commercial Management holds 40% of Zhuhai Wanda, making it the single largest shareholder. Pacific Alliance and several existing and new investors will participate in the investment, with a total shareholding of 60%.
According to the prospectus provided by Zhuhai Wanda to the Hong Kong Stock Exchange in June 2023, Dalian Wanda Commercial Management Group directly owns approximately 69.99% of the total issued shares of Zhuhai Wanda Commercial Management, and indirectly owns approximately 8.84% of the total issued shares through Zhuhai Wanxin, Zhuhai Wanying and Yinchuan Wanda.
This also means that after the signing of the new agreement, the shareholding ratio of Dalian Wanda Commercial Management Group in Zhuhai Wanda Commercial Management has decreased by at least 38.83%.
This is a huge concession for Lao Wang. In the announcement, Wanda said that it will work with important shareholders such as Pacific Alliance to further optimize the company’s corporate governance, maintain the stability of the management team, and jointly support the company’s long-term development.
It also seems like a good option for investors, as the charterer business is so easy to do. According to public records, Zhuhai Wanda Commercial Management currently manages 494 large commercial centers in 227 prefecture-level cities and above across the country. In the past two years, the number of commercial centers managed by Zhuhai Wanda Commercial Management has grown from 417 to 494, an average annual growth rate of about 9%. Zhuhai Wanda Commercial Management is already the world’s largest commercial management company in terms of commercial area under management.
And Zhuhai Wanda Business Management can continue to create profits. In 2021 and 2022, Zhuhai Wanda Business Management’s after-tax profit will be 5.30 billion yuan and 7.50 billion yuan respectively, and the estimated profit in 2023 will reach 9.50 billion yuan. In this way, the annual growth rate will reach 34%.
At a time when many real estate companies are struggling to find financing to get out of trouble, Wanda Business Management is thriving. More importantly, there is no new gambling agreement in the agreement, and the increasingly emaciated Lao Wang finally does not need to carry the spell of "listing", although listing will still be a must for Zhuhai Wanda.
Shen Meng, executive director of Chanson Capital, said that Wanda Commercial Management is an asset-light enterprise, and the value of shares that are not listed is limited. Institutional investments still seek returns. Wanda must not only maintain stable performance, but also promote listing when future conditions are met.
And Wanda is not safe, need to continuously improve competitiveness in business operations, brand building, Client Server, etc., to cope with the increasingly fierce market competition, while continuing to pay attention to the source of funds and the use of efficiency. What’s more, Dalian Wanda business management also need to take out about 38 billion yuan to buy back equity.
In this regard, Bai Wenxi, chief economist of IPG China, told ifeng.com "Eye of the Storm" that according to Wanda’s announcement, Pacific Alliance will join other investors to reinvest in Zhuhai Wanda Commercial Management after its investment redemption period expires in 2021. This means that Wanda needs to really put up the money to Pacific Alliance and other investors, and then Pacific Alliance and other investors will invest in Zhuhai Wanda Commercial Management. However, the specific investment method may change according to the actual situation.
Shen Meng directly stated that the repurchase is only formal, and it only needs to be readjusted according to the transaction structure. There is no need to really hand over the money to the other party, and then let the other party invest it back.
Second, the good show may have just begun
According to public information, PAG’s main business covers the credit market, private equity and real estate. Its previously released prospectus shows that the revenue of PAG Investment has shown a continuous growth momentum, climbing from $436 million to $737 million, with a compound annual growth rate of 30.02%.
In addition to Wanda, PAG’s portfolio also includes a number of well-known Chinese companies, such as Tencent Music, Nayuki, Baosteel Gas, Sinopharm Group, Borui Bio, and Lexin Financial.
In 2010, Shan Weijian chose to join PAG as chairperson and chief executive. The low-key but well-known capitalist was the first Chinese student at the University of San Francisco. During his career, he served as the Texas Pacific Group, a globally renowned private equity firmPartner and co-managing partner of TPG Asia.
Some people who have worked with Shan Weijian said of him: "Although he is a low-key person, he has a huge influence in the industry." And more people regard him as "a barbarian at the door". Since he took the helm of PAG, he has won absolute control of Bikang Pharmaceutical and Zhenai.com.
He is particularly active in real estate, which is seen as one of PAG’s three core businesses.
In 2013, PAG invested in the acquisition of a 65% stake in Shanghai Yueda 889 Plaza project. In 2015, PAG joined forces with Vanke to acquire the third phase of Enterprise World from Ruian Real Estate.
In addition, PAG also acquired 100% of China Merchants Group Tower in Shanghai, 100% of China Merchants Group Plaza in Shanghai, and 91% of Beijing China Merchants Group Tower in the heart of Beijing’s business district through a real estate fund jointly established with China Merchants Shekou.
On August 30, 2017, PAG, the second-largest shareholder in Chunquan REIT, published an open letter. In the letter, they called for a special shareholders’ meeting with the aim of ousting Chunquan Asset Management, which is currently controlled by Japanese capital. They proposed returning management to Chunquan REIT itself, and expected to be able to send personnel to the board of directors, while appointing professionals to review the company’s management.
A year later, PAG went further and made a direct bid for Chunquan REIT. Chunquan REIT’s main asset is the China Trade Center in Beijing.
As for this investment strategy, Mr. Shan has made it clear that his aim in fighting for control is to change the management of the acquired company in order to increase the value of the company. He is convinced that "only by creating value through acquisitions can we truly gain income."
One is a capital tycoon, a real estate tycoon, and their story may have just begun.
