Developers act to move HK listings to China market

BEIJING • Two of China's largest developers took steps that moved them closer to potentially switching their stock market listings from Hong Kong to China, where their top executives have said they can get higher valuations.

Dalian Wanda Commercial Properties, controlled by billionaire Wang Jianlin, requested a suspension of its shares yesterday pending an announcement pertaining to an exchange code on mergers and takeovers, as Mr Wang pursues a buyout plan that will help him re-list the shares on the mainland.

Meanwhile, Evergrande Real Estate Group shares surged by the most in more than a month in Hong Kong after it said on Sunday it had agreed to pay 3.6 billion yuan (S$749 million) to acquire a stake in Shenzhen-listed China Calxon Group, an acquisition that could signal company chairman Hui Ka Yan is also considering a similar move.

While both companies have suggested they are motivated by a desire to seek higher valuations on the mainland, the two deals face very different chances of success, analysts say.

JPMorgan Chase's Cusson Leung noted that while Evergrande said the deal will help it get access to the A-share market, privatising and re-listing in China "is not that feasible".

As Evergrande is a "red-chip" company incorporated offshore, it faces far more obstacles than Wanda Commercial, which is incorporated in China and has an "H-share" listing, Mr Leung said in a note yesterday.

Citigroup's Oscar Choi said unwinding Evergrande's offshore structure and transferring assets to China to inject them into Calxon's A-share listing could trigger huge tax liabilities for Evergrande.

Hurdles include transferring ownership of Evergrande's stakes in other Hong Kong-listed firms.

Evergrande owns 75 per cent of Evergrande Health Industry Group and a majority stake of Internet service provider HengTen Networks Group.

Mr Wang, on the other hand, is so confident he'll be able to take Wanda Commercial private and re-list it on the mainland that he has offered investors a guaranteed return if they help him buy the 14.41 per cent of the company's H-shares he and other Chinese domestic investors don't already own.

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A version of this article appeared in the print edition of The Straits Times on April 26, 2016, with the headline 'Developers act to move HK listings to China market'. Print Edition | Subscribe