China

Vanke’s Partners To Buy 35.84 Mln shares In Vanke: Aiming For Stronger Control Of Vanke

This article was originally published on May 28, 2014 at 11:33 pm EST

Summary:

  • According to Tencent Finance, China’s largest real estate developer China Vanke (CH: 000002) recently announced that Shenzhen YingAn Financial Consulting Co. plans to buy 35.84 million A-shares, or 0.33% of the company, for RMB 300 million.
  • Shenzhen YingAn Financial Consulting was launched on Apr. 25 by Vanke’s 1,320 partners. The 1,320 partners were selected in March from Vanke’s employees.
  • Shenzhen YingAn Financial Consulting also has plans to purchase additional shares in Vanke in the future.

Why It Matters:

  • SGI reported in March on Vanke’s plans to restructure management of the company, including adopting a partnership system which gave the board more power and prevented a hostile takeover. This latest move indicates that Vanke has progressed further with structural reform and provides greater control for the board.
  • Vanke’s ownership structure makes it a very easy target for a hostile takeover. China Resources, Vanke’s largest shareholder, owns 14.7% of the company and is the only shareholder owning more than 2% of Vanke. But China Resources is only acting as a financial investor and hasn’t yet been involved in any management decisions. However, Liang Yu, Vanke’s President, says that the company has identified several institutions that might launch a hostile takeover bid.
  • Analysts expect Vanke’s management team and partners to hold about a 10% stake in the company in the future.