The failure of the VAM listing of Zhuhai Wanda Commercial Management has brought a lot of tremors to the entire industry and the capital market. A well-prepared capital feast ended hastily, and the guests scattered.
Even Wanda's annual meeting, which is the most lively every year, has lost the hustle and bustle of the past. On January 24, the topic of "Wang Jianlin's annual meeting stopped" appeared on the hot search. It is understood that Wanda Group recently held an annual traditional event - Wanda Annual Meeting as scheduled, but the emaciated Lao Wang, who was exhausted in order to repay his debts, no longer had any interest, and just made a brief business performance report, which was very low-key.
In the past years, Wanda's annual meeting has a very clear process, annual work conference, commendation of advanced representatives, 11 sub-system meetings, and then dinner + New Year party. Among them, Wang Jianlin's annual handwritten work report and singing session are regarded as the most anticipated "knowledge points" by everyone.
The year 2023 that has just passed is the year of Wang Jianlin's "tightrope walking". According to public information statistics, Wanda has repaid more than 18 billion yuan of public debt in 2023. But the most important thing is that Wang Jianlin successfully resolved the crisis of the VAM agreement of up to 38 billion yuan at a critical juncture. Everyone once again praised Lao Wang's "big pattern", but the richest man's heart must be mixed.
At the end of last year, faced with a VAM agreement of up to 38 billion yuan, Wang Jianlin chose to lose absolute control of Zhuhai Wanda Commercial Management in exchange for a further alliance with PAG Investment. The benefits are also obvious, and Wang Jianlin does not have to pay back the "refund fee" of up to 18 billion yuan for the time being.
But as we all know, there is never love for no reason in the capital market, let alone Lao Wang, who is mired in debt. Half a month after the VAM crisis was resolved, a new restructuring plan seemed to be in the making-"Xindameng Commercial Management Co., Ltd." was about to come out.
On January 16, 2024, Dalian Wanda Commercial Management added new foreign investment and established Dalian Xindameng Commercial Management Co., Ltd. (hereinafter referred to as "Xindameng Commercial Management") with a shareholding ratio of 99%. According to the new agreement, "PAG will join other investors and Wanda Commercial Management to sign a new investment agreement, accounting for 60% of the shares, and there will be no listing VAM date." ”
Dalian Wanda Commercial Management is the main owner of Wanda Group's commercial center, while its original subsidiary, Zhuhai Wanda Commercial Management, is engaged in the operation and management of the commercial center.
Will PAG Investment, which has always liked to snipe at prey in the capital market, really stop there? The birth of Xinda Alliance's commercial management quickly aroused the reverie of people in the industry.
Will the emergence of a new commercial management company with the names of "Wanda" and "Taimeng" be a new platform for Wanda Commercial Management to introduce new strategic investment and impact IPO? What new capital actions will there be in the follow-up of the new company with a registered capital of up to 16.2 billion yuan?
01. The "ambition" of the godfather of private equity
Unlike Wang Jianlin, "private equity boss" Shan Weijian likes to consider himself a scholar. He likes to publish articles in both Chinese and English, sometimes with elegant language, sometimes discussing the reality of the trade war, sometimes commenting on macroeconomic policies, and expressing long-term optimism about China's economy.
Today, he leads PAG as one of Asia's largest private equity funds, with more than $50 billion in assets under management. In 2022, Shan Weijian also joined the board of directors of Alibaba as an independent director, and earlier served as an independent director on the boards of Wilmar International, Baosteel and Lenovo.
Shan Weijian's growth experience can be described by the word legend. When he was only 15 years old, Shan Weijian was sent to the Gobi Desert in Inner Mongolia, where he stayed for 6 years and missed the opportunity to go to middle school. Later, when he went to the United States to study, he successfully counterattacked and was admitted to the University of California, Berkeley, during which he was in the United States, his doctoral supervisor was Yellen, the current US Treasury Secretary.
Under this special background of Chinese and Western education, Shan Weijian quickly grew into a typical Wall Street person, and after graduation, he worked at Morgan Bank and Xinqiao Investment, which allowed him to gain a stack of glittering resumes. The most talked about case is that he took a controlling stake in the First Bank of Korea during the Asian financial crisis.
In 1999, Shan Weijian defeated HSBC to successfully acquire the First Bank of Korea and help it get on the right track, and became famous. Fortune magazine called Shan Weijian "the king of private equity in China", and he was praised by the media as "making history" for his acquisition of Shenzhen Development Bank.
These well-known successful cases have made Shan Weijian's image of a private equity predator well-known in the PE circle. In the face of a new shareholding company, Shan Weijian once bluntly said, "Our control is reflected in one aspect, that is, we can appoint or change the CEO at any time." ”
He has always been unwilling to only make simple financial investment, but wants to obtain the right to operate and manage the enterprise, and his style is very strong. In the capital market, many companies are strongly controlled by PAG, and the original shareholders of the companies selected by it often lose their right to speak, and after some transformation and reorganization, Shan Weijian often sells them at a premium, thereby creating profits.
Since Shan Weijian joined PAG in 2010, he has successively invested in projects such as Yingde Gases, Zhenai.com, and Universal Studios Osaka, and has also obtained absolute control of many companies such as Bikang Pharmaceutical and Zhenai.com.
Regarding its investment performance in China, an investor commented to "City Boundary", "PAG Fund is the only M&A fund in China that can be counted as large cap, and the income of one project of Guangyingde Gases is comparable to that of most VC funds."
In the past two years, PAG has appeared in the list of venture capital companies many times, and many of them have followed the domestic investment boom. According to incomplete statistics from the "City Boundary", in 2023 alone, PAG has successively investigated projects such as Haitian AAC, a professional provider of AI training data, Meiya Pico, a leading domestic electronic data forensics company, and Sun Paper, and its investment presence is extremely active.
On December 12, 2023, PAG signed a new investment agreement with Dalian Wanda Commercial Management Group. PAG will work with other investors to reinvest in Zhuhai Wanda Commercial Management after redemption by Dalian Wanda Commercial Management Group at the end of its 2021 redemption period. According to the new agreement, Dalian Wanda Commercial Management will hold 40% of Zhuhai Wanda Commercial Management, and several existing and new investor shareholders including PAG will hold a total of 60% of the shares.
As for the new investors, The Paper quoted a source close to Wanda as saying, "There are a few existing investors who have chosen to withdraw from the investment, but at the same time new investors have entered, including some overseas investors." Previously, Caixin Weekly also reported that "along with Shan Weijian, foreign investors from the Middle East are also included." ”
In terms of holding hands with the "financiers" in the Middle East, Shan Weijian had a successful case not long ago. In August 2023, as the controlling shareholder of Hong Kong-listed Fengxiang Co., Ltd., PAG Group sold 160 million shares of Fengxiang Co., Ltd. to a company indirectly wholly owned by the Abu Dhabi Investment Authority, a sovereign institution in the Middle East. After the transaction, Abu Dhabi Investment Authority indirectly holds about 9.9% of the shares of Fengxiang Shares.
Over the past three years, investors have struggled to raise money and find good projects, but PAG still manages nearly $50 billion in capital. In the face of Wanda Commercial Management's current development predicament, what is the way for PAG to return to heaven?
02. Seek new capital paths
What is PAG's style of investment in China? Jack, an investor who bought PAG's bond products, sharply commented, "Wild." "Keen to save the wind and dust, I have invested in a bunch of private real estate quilts in the past two years."
In the financing boom of real estate dollar bonds, PAG once had a place. For example, China South City has publicly stated that the largest holder of its dollar bonds is PAG Investment Group. At present, PAG has supported the extension of China South City's US dollar bonds, and at least one of its five US dollar bonds to be rolled over has received more than 75% of the votes.
Many investors have bought real estate bonds under PAG's signboard. In the market of real estate bonds falling endlessly this year, many real estate bonds of PAG Investment Group are still inevitably losing money. But this does not affect the weight of Shan Weijian in Jack's mind, "the strength of the big guy is still very strong".
However, in the face of Wanda Commercial Management, as an expert in the M&A industry, PAG must also have enough understanding. Previously, in order to reduce investment risks, PAG would often take control of the shares, lead the operation to extricate the target company from difficulties, and finally exit to benefit.
For Wanda Commercial Management, the key to the success of the investment also depends on whether it accurately identifies the amount of debt and the quality of its assets. This is also a difficult problem that Wang Jianlin had to deal with at the beginning of the formal cooperation.
Recently, Wang Jianlin has rearranged his troops in the business and optimized and adjusted the assets he holds. Since January 2024, Dalian Wanda Commercial Management has sold 4 Wanda Plazas one after another, and the buyers are all from the same company: Zoomlion Fund.
Not only sold the asset-heavy project, Wang Jianlin also began to "move" the asset-light business Foshan Shunde Wanda Plaza, sold to Midea Real Estate. "After the 'radical' expansion in the early years, Wanda also has a large number of 'old and difficult' projects in the management of the project. A Wanda employee said.
As we all know, in the past years, Wang Jianlin's asset-light business has often achieved large-scale expansion by cooperating with third parties. However, the natural DNA of commercial real estate and residential development is very different, and residential development only needs to rely on early property pre-sales to obtain a large amount of cash flow.
Commercial real estate players, on the other hand, are not so lucky. In order to get cash flow, commercial companies need to complete a long development cycle + operation cycle before they can wait until the stage of getting cash flow.
The asset-light model allows Wanda not to spend a lot of money on upfront development and operation and avoid debt risks, but in the end, these risks will still fall on local developers who cooperate with Wanda in asset-light cooperation. A commercial real estate person said.
The most anticipated game for real estate players is to let the underlying assets really open up the path of asset securitization, and successfully promote the listing of REITs (real estate investment trusts) products, so that investors can enjoy the benefits in advance, which has always been an uncontested dream of Wang Jianlin.
In 2019, Wang Jianlin assigned two key points to Wanda Commercial Management, one is to completely de-real estate, and the other is to expand asset securitization. At that time, Wanda also planned to promote REITs to be listed in Singapore, and it was rumored that the valuation could exceed US$1 billion.
On the other hand, real estate investment, as one of PAG's three core strategic sectors, has also made a lot of efforts in REITs funds in recent years. The most concerned case by the industry is PAG's "bad-faith" bid for Hong Kong-listed RETIs "Spring REIT".
In September 2018, PAG made a 60% premium offer to acquire Spring REIT without discussing with the REIT manager, which was deemed a "bad-faith" bid by management. Later, Taimeng did not succeed after several tosses. Today, PAG holds an indirect 11.85% stake in Spring REIT.
Prior to the acquisition of Wanda, in November 2022, PAG and China Merchants Shekou jointly established a real estate fund in the Cayman Islands, holding an 80% stake in the real estate fund through its subsidiary PREP.
By October 2023, the ice-breaking of real estate private equity funds and public REITs has given many real estate players a boost. Yu Liang, Chairman of the Board of Directors of Vanke, once gave an example, saying, "It is similar to the importance of mortgage loans in residential development. ”
But not all players can enjoy this bonus. A real estate practitioner told "City Boundary" that "there are two requirements for the listing of REITs: one is stable performance, and the other is that the quality of the underlying assets should also be good. Profit and asset performance are indispensable. However, if the rate of return on normal rent is too low, it is basically not eligible for the issuance of REITs. ”
Judging from the three-year performance, Wanda Commercial Management's performance still looks very good, and it has completed its performance target for three consecutive years. In 2021, its after-tax income was 23.5 billion yuan, 27.1 billion yuan in 2022 and 29.3 billion yuan in 2023, with an average annual growth rate of about 12%, and its after-tax profit in 2021 was 5.3 billion yuan, 7.5 billion yuan in 2022 and 9.5 billion yuan in 2023, with an annual growth rate of 34%, and the rental rate has remained at 100% for many years.
In the face of the new REITs outlet, Wanda has also taken action. According to media reports, in August 2023, Wanda prepared for the issuance and application of public REITs for consumer infrastructure, and has sought opinions from the cooperative managers of public funds. However, as of now, there has been no related product release.
03. There are still "old friends" trapped in the game
In order to get rid of the pressure of 38 billion yuan of VAM repurchase, Wang Jianlin exchanged equity for funds, and his shareholding in Zhuhai Wanda Commercial Management dropped sharply from 78.83% to 40%.
But the failure of the listing to test Lao Wang did not end there. In addition to PAG's investment, behind Dalian Wanda Commercial Management, there are still a number of strategic investors waiting to be fed. Behind the expiration of the 38 billion bet, many of Wang Jianlin's "old friends" are still trapped in this capital bureau.
On the way to hit the gate of listing, Wang Jianlin has been walking for nearly 10 years. Back in 2014, Wanda Commercial (the predecessor of Dalian Wanda Commercial Management) successfully landed on the Hong Kong Stock Exchange, but because commercial real estate was not favored by the capital market in Hong Kong, the stock price was depressed for a long time after listing. Less than a year after its listing on the Hong Kong Stock Exchange, Wanda Commercial began to consider delisting and switched to A-share listing.
In order to prepare for the privatization and delisting of Hong Kong stocks, Wanda Commercial has created a new model, that is, institutional investors subscribe for shares to prepare privatization funds. In January 2018, led by Tencent Holdings, Suning, Sunac and JD.com jointly invested 34 billion yuan in Dalian Wanda Commercial Management Group, acquiring about 14% of the shares held by investors introduced by Wanda Commercial Hong Kong when its H-share delisting was introduced.
Of the total investment of 34 billion yuan, Tencent invested 10 billion yuan with a shareholding ratio of 4.12%, Suning and Sunac China invested 9.5 billion yuan with a shareholding ratio of 3.91%, and JD.com invested 5 billion yuan with a shareholding ratio of 2.06%.
At that time, Wanda had promised that if Wanda Commercial could not complete the A-share listing before August 31, 2018, or two years after delisting from the Hong Kong stock market, Wanda Group would repurchase the shares, and the repurchase price would guarantee an annual return of 12% for domestic investors and 10% for overseas investors.
However, Wanda Commercial has been hovering in front of the door of A-share listing for many years, but has not landed on A-shares as expected, and finally officially withdrew its A-share listing application in 2021. Wang Jianlin had no choice but to set up a separate listing entity again. In 2021, by divesting the asset-heavy business, Wang Jianlin re-established a new commercial management listing platform, Zhuhai Wanda Commercial Management, applied for H-share listing and signed a VAM agreement.
Now, with the expiration of Zhuhai Wanda Commercial Management's VAM limit, new and old investors have made their own decisions. However, for the "Big Four" who had previously taken out 34 billion yuan in January 2018 to invest in Dalian Wanda Commercial Management, there has never been any relevant action to cash out. At a time when cash flow is the line of life and death, many investors have no patience to wait.
On a social platform, many shareholders called on Sunac to withdraw from Wanda Investment and cash out tens of billions. Not long ago, with the arrival of the VAM date, some investors who had been waiting for Zhuhai Wanda Commercial Management to go public for two years without results had begun to withdraw one after another. On December 14, Country Garden announced that it would sell 1.79% of the shares of Zhuhai Wanda Commercial Management, becoming the first company among 22 investors to exit.
The news about the withdrawal of the above-mentioned "Big Four" was also very loud for a while. Not long ago, it was once rumored in the market that Jingdong and Suning were also going to withdraw from Dalian Wanda Commercial Management, and there was no news of any withdrawal. However, this does not mean that there is no possibility of quitting. At present, Yonghui Supermarket has officially announced its withdrawal from Dalian Wanda Commercial Management.
For Wang Jianlin, how to appease the emotions of these investors and ensure their interests is also a difficult problem in front of him. At present, with the expiration of the VAM agreement, Wanda Commercial Management's original listing platform, Zhuhai Wanda Commercial Management, no longer updates its listing dynamics.
On December 28, 2023, Zhuhai Wanda Commercial Management's prospectus was invalidated for the fourth time, but unlike the previous update of the listing documents immediately after the invalidation, as of now, Zhuhai Wanda Commercial Management's listing filing is still in the status of "supplementary materials".
However, in contrast, another new business management platform quickly surfaced. According to the latest news, on January 16, Dalian Wanda Commercial Management Group Co., Ltd. added foreign investment and established Dalian Xindameng Commercial Management Co., Ltd.
The legal representative is Xiao Guangrui, who has been a veteran of Wanda Group for many years. The supervisor of the company is Ma Jun, who is also a supervisor of Dalian Wanda Commercial Management, and holds various positions in various companies under the Wanda family.
In terms of equity relationship, Sundar Alliance is 99.9938% owned by Dalian Wanda Commercial Management, and 0.0062% is held by Dalian Wanyu Enterprise Management Co., Ltd., which is a wholly-owned subsidiary of Dalian Wanda Commercial Management. The registered address is "Xigang District, Dalian City, Liaoning Province", the base camp of Wanda Group.
Will the establishment of Xindameng be a new listed company where Wang Jianlin's old tricks are repeated? Although PAG's indefatigable indefatigability has enabled Wanda Commercial Management to overcome the gambling risk, how should Wang Jianlin fall in the next capital chess game? The test of the times on Lao Wang has not stopped.
Author | amuse
Edit | Sun Chunfang
Operations | Liu Shan