Middle Eastern financiers rushed to Wanda's aid, and signed a 60 billion investment on the spot

Every reporter: Chen Li Every editor: Chen Mengyu

It's not like a signing ceremony worth 60 billion yuan.

At 9 a.m. on March 30, a 12-inch display screen at the entrance of the Shanghai Hall on the third floor of Shangri-La Hotel, Dalian, clearly showed the upcoming signing here.

The reporter of "Daily Economic News" saw at the scene that the entire conference hall was less than 100 square meters, and in the middle of the wall on the right side of the door, a truss of about 3 meters high and about 4 meters long was placed, and there were less than 50 chairs in the venue.

At 10 o'clock in the morning, the signing ceremony officially began, and the participants were seated one by one. Relevant officials from the Dalian Municipal Government and the Xigang District Committee of Dalian City, relevant personnel from Dalian Wanda Commercial Management Group, and investors from PAG, CITIC Capital, Abu Dhabi Investment Authority, Mubadala and other parties were seated on both sides.

The signing ceremony lasted only 30 minutes, which was very simple, but efficient - the investment of 60 billion yuan was settled.

Different from the imagined serious atmosphere, from the reporter's observation, everyone at the scene looked relaxed and happy, and the speeches of all parties frequently attracted the nods and echoes of the participants on the spot. At the end of the group photo, PAG's investment partners asked the photographer to "open up the beauty", which drew laughter from the audience.

According to the reporter's understanding, there was only a 3-day gap between the finalization of all the investment details by the investors and the official signing ceremony.

Dalian Wanda Commercial Management Group six-party signing ceremony site courtesy of the enterprise

Wanda succeeded.

60 billion yuan, Wang Jianlin's second "Century Signing".

The last one was 7 years ago, involving an amount of 63.75 billion yuan, and the transaction parties were Sun Hongbin and Li Silian.

On March 30, Zhuhai Wanda Commercial Management Group ushered in a new investor. On the same day, Dalian Wanda Commercial Management signed an investment agreement with PAG (PAG), CITIC Capital, Ares, a wholly-owned subsidiary of Abu Dhabi Investment Authority (ADIA), and Mubadala Investment Company (hereinafter referred to as the investors) in Dalian.

According to the agreement, the investors will jointly invest approximately RMB60 billion in Dalian Sundameng Commercial Management Co., Ltd. (hereinafter referred to as Sundameng), holding a total of 60% of the shares, and Dalian Wanda Commercial Management will hold 40% of the shares.

The project is expected to close in the second quarter.

The largest private equity investment in China in the past five years

According to the agreement, the investors will jointly invest about 60 billion yuan in Xinda League, holding a total of 60% of the shares, and Dalian Wanda Commercial Management will hold 40% of the shares.

This is the largest single private equity investment in China in the past five years.

Suntec Alliance is a newly established holding company of Dalian Wanda Commercial Management, and its subsidiary is Zhuhai Wanda Commercial Management, which is a commercial plaza operation and management platform, currently managing 496 large-scale commercial plazas. Since PAG, CITIC Capital, Ares Management and other existing investors invested in August 2021, the company has exceeded its performance target for three consecutive years, with dividends to shareholders of RMB4.6 billion in 2021, RMB6.7 billion in 2022 and RMB8.8 billion in 2023, respectively.

Just a few days ago, Xindameng's 16.2 billion yuan equity was once frozen. The reason for the freeze was that Wanda's project had a dispute with a bank over an operating loan, and the bank applied to freeze the equity of Sundameng held by Wanda Commercial Management before the lawsuit. However, the freeze was lifted on March 25.

"Wanda Group has a number of businesses, and the equity freeze involved before is not directly related to Suntec and does not affect Sunda and this transaction, and the Sunda Alliance transaction itself will also provide considerable funds for Wanda Group, which will help solve similar problems of Wanda Group. ”

Huang Dewei, partner of PAG and president of PAG China, said in an interview with the reporter of National Business Daily that PAG has become a shareholder of Zhuhai Wanda Commercial Management since 2021, and has a full understanding of the company's business itself and team, and now has full confidence as a major investor of Sundar Alliance. The addition of new foreign capital will also boost the company's morale and confidence.

"With the investment of the new shareholders, I believe that the company will enter a more stable and rapid development stage. At the same time, we have close contact with shareholders and have further full communication with each other. ”

The relevant person in charge of Dalian Wanda Commercial Management pointed out that the new investors pay special attention to the fulfillment of corporate social responsibility, "which is highly consistent with Wanda's corporate culture and values, and I believe that it will have the same frequency effect in the follow-up cooperation." ”

The vast majority of investors choose to continue investing

Wanda's reintroduction of investors stemmed from a failed bet.

In August 2021, in order to re-list, Wanda Group established Zhuhai Wanda Commercial Management and introduced 22 institutional investors, including PAG, Country Garden, CITIC Capital, Ant, Tencent, and Zheng Yutong family, of which PAG alone involved 18 billion yuan.

According to the VAM agreement, from 2021 to 2023, the net profit of Zhuhai Wanda Commercial Management should not be less than 5.19 billion yuan, 7.43 billion yuan and 9.46 billion yuan respectively. If this is not achieved, Dalian Wanda and Zhuhai Wanying (Zhuhai Wanda shareholders) will compensate the investors by transferring the relevant number of shares for zero consideration or paying cash to the investors.

If Zhuhai Wanda Commercial Management cannot complete the listing before December 31, 2023, investors have the right to request Zhuhai Wanda to repurchase all or part of the shares at the repurchase price of the principal plus an annualized interest rate of 8%.

According to a rough calculation, if the listing is not completed on time and the relevant repayment requirements are not waived by the investors, Wanda will need to pay about 38 billion yuan for the equity repurchase.

On October 21, 2021, Zhuhai Wanda Commercial Management submitted a prospectus to the Hong Kong Stock Exchange for the first time, and thereafter submitted a prospectus three times in April 2022, October 2022 and June 2023, but as of the expiration of the prospectus, it has not yet obtained the approval of the issuance of H shares issued by the Securities Regulatory Commission.

However, on December 12, 2023, when there were only a dozen days left before the agreed listing time limit with investors, PAG and Dalian Wanda Commercial Management Group both announced that PAG would work with other investors to reinvest in Zhuhai Wanda Commercial Management after redemption by Dalian Wanda Commercial Management Group at the expiration of its investment redemption period in 2021.

According to the agreement at the time, Dalian Wanda Commercial Management's shareholding in Zhuhai Wanda Commercial Management was reduced to 40%, and several existing and new investor shareholders such as PAG held a total of 60% of the shares.

At that time, a person close to Wanda told reporters: "Some existing investors have chosen to withdraw from investment, but at the same time, new investors have entered, including some overseas investors." ”

Now, the "overseas investors" have been confirmed, and after Country Garden, whether there are any previous investors who have opted out has not yet been clarified at the signing ceremony.

But according to a person familiar with the matter:

Warburg Pincus expects to recoup its investment in Zhuhai Wanda Commercial Management, but only a tiny fraction of the total investment at that time.

It is reported that in 2021, Warburg Pincus acquired a minority stake in Zhuhai Wanda Commercial Management with an investment amount of 970 million yuan (US$135 million).

At the same time, the withdrawal of Country Garden's services is also considered to be a high probability event by the outside world.

However, the vast majority of investors choose to continue investing.

As for why he continued to choose to invest in Wanda Commercial Management, Ye Xin, managing director of CITIC Capital, said that we have always been full of confidence in the entire Chinese consumer market and retail market, and Suntec Alliance is the largest commercial management company in China and even in the world, and the company has also achieved good returns in the two years since becoming a shareholder of Zhuhai Wanda Commercial Management.

"The debt problem may be effectively resolved"

In fact, the introduction of new investors not only relieved the crisis of Wanda's failure to list VAM, but also provided Wanda with new incremental funds.

According to the interim report of corporate bonds disclosed by Dalian Wanda Commercial Management at the end of August 2023, as of the end of the first half of 2023, Wanda Commercial Management's cash and cash equivalents balance was 14.692 billion yuan, a significant decrease of 53.44% year-on-year. In addition, the consolidated interest-bearing liabilities were 141.283 billion yuan, of which the interest-bearing liabilities due within one year were 29.257 billion yuan.

According to incomplete statistics from the reporter of "Daily Economic News", since 2023, Wanda Group has sold a total of 14 Wanda Plazas, including Wanda Plazas in first-tier cities such as Shanghai and Guangzhou.

"These projects will continue to be managed by Suntec in the future. Huang Dewei said frankly that when he invested in Wanda Commercial Management in 2021, the business mainly came from Wanda Plaza, and there were not many third-party management projects.

"Today, as a commercial operations management company, Wanda is our biggest customer. In the future, if Wanda continues to sell its own properties, it will be one more customer for Suntec. ”

In fact, as early as 2015, Wanda began to launch an asset-light strategy.

In 2017, Mr. Wang sold 77 hotels and 13 cultural tourism projects, as well as a number of overseas real estate projects, in a move that was considered a sign of transformation at the time. In 2018, "Wanda Commercial Real Estate" was renamed "Wanda Commercial Management", divested its real estate business in 2019, and fully implemented the asset-light strategy in 2021.

The frequent sale of Wanda Plaza is Wanda Group's self-help measure to deal with the liquidity crisis, and assets such as Wanda Films and Wanda Hotels are also sold in exchange for liquidity.

Now, with the signing of the new investor, a person close to Wanda said, "Wanda's debt problem may be effectively resolved." ”

Huang Lichong, president of Huisheng International Capital, said that the transaction not only reflects the effectiveness of the risk isolation strategy adopted by investors when investing in distressed companies, but also represents that Wanda's failure to gamble will not lead to an outcome similar to Evergrande's bankruptcy, and Wanda's creditors have the opportunity to get their investment back, which also provides a possible rescue example for other troubled companies.

This time, there was no VAM protocol set up

The outside world is more concerned about whether Wanda Group, whose shareholding ratio has dropped sharply, can still defend its control of Xinda Alliance in response to the entry of the investment team led by PAG.

In Huang's view, this is a very successful investment.

According to his recollection, on December 12, 2023, PAG and Wanda signed a framework agreement, and on this day, Beijing also fell its first snow of 2023.

At 2:00 a.m. that day, after the negotiation of the last clause was completed, I came out of the office of Wanda's headquarters with snow on the ground and no footprints, which I thought was a good omen.

Although the negotiations between us and us were fierce, in the heavy snow, I saw that both our PAG team and the Wanda team were like children, smiling happily and innocently in the snow. At that time, I felt that this team was very pure, and we must be able to work well together.

As the core figure of PAG, Shan Weijian is known as the "King of Private Equity" in the capital industry.

In 2022, Shan Weijian explained his investment style in an interview with Yicai, that is, Buy-out. Unlike simple financial investments, this style of investment is intended to gain control of the underlying asset.

The reporter of "Daily Economic News" reviewed in detail the 13 years that Shan Weijian was at the helm of PAG, except for a small amount of financial investment such as Nai Xue's tea, which basically revolved around the acquisition of control, such as Yingde Gas, Universal Studios Osaka, etc.

In the real estate dollar bond financing boom, PAG also had a place. For example, China South City has publicly stated that one of the main holders of its dollar bonds is PAG.

"In the future, we will build a sound governance structure for the company, including PAG, CITIC Capital and major investors, all of whom will participate in corporate governance as directors on the board of directors. Ye Xin said.

Huang Dewei pointed out: "To a large extent, Suntec will be a significant shareholder of Suntec Group, but not an absolute controlling shareholder, after the completion of the investment. ”

According to him, Suntec will adopt a completely modern corporate governance in the future, including the implementation of corporate decision-making and the management responsibility system under the authorization of the board of directors, "We will be deeply involved in the company's operation and management, governance."

Compared with the previous VAM agreement, this time "all of us are ordinary shareholders, and we will not have any redemption obligations with each other, and we will jointly bear the risks of equity investment in the future, and at the same time obtain the benefits of future equity investment".

However, "in the future, the company will develop to a certain extent, and the time is ripe, and it is not ruled out that it will arrange for listing." ”

Middle Eastern investors have done extensive due diligence on Wanda

This time, Wanda Group was able to hold hands with the Middle East financiers, and PAG contributed a lot.

In August 2023, as the controlling shareholder of Hong Kong-listed Fengxiang shares, PAG sold 160 million shares of Fengxiang shares to a company indirectly wholly owned by the Abu Dhabi Investment Authority (ADIA), a sovereign institution in the Middle East. After the completion of the transaction, Abu Dhabi Investment Authority indirectly holds approximately 9.9% of the shares of Fengxiang Shares.

Founded in 1976, it is a prudent investment on behalf of the Abu Dhabi government, with total assets under management of US$853 billion, ranking third in the world and the largest sovereign wealth fund in the Middle East, according to the official website of the Abu Dhabi Investment Authority. The company invests in all major markets around the world.

In July 2003, China liberalized QFII (Qualified Foreign Investors) for the first time, and at the end of 2008, according to the website of the China Securities Regulatory Commission, the Abu Dhabi Investment Authority was granted a QFII license, becoming the first QFII institutional investor in the Middle East. In the 16 years since entering the A-share market, Abu Dhabi Investment Authority has diversified its investment fields, involving petrochemical energy, science and technology, consumption, medicine, new energy, finance and other fields, and once became the second largest QFII in mainland China.

According to Choice data, as of the end of 2023, the Abu Dhabi Investment Authority appeared in the list of the top ten shareholders of outstanding shares of 16 Chinese A-share listed companies that have announced financial reports, with a total of 472.07 million shares and a total market value of 7.392 billion yuan, investing in well-known enterprises such as Zijin Mining, Gree Electric Appliances, CICC, and Bank of China.

In the field of real estate, Abu Dhabi Investment Authority invested in Pudong Jinqiao and China Merchants Jiyu, holding 4.852 million shares and 14.97 million shares respectively, accounting for 0.43% and 1.41% of the company's total shares, both of which are the top ten circulating shareholders.

Another Middle Eastern investment institution, Mubadala, is the Abu Dhabi sovereign wealth fund, which is the second largest sovereign wealth fund in Abu Dhabi, after the Abu Dhabi Investment Authority.

In 2015, Mubadala Investment Company, China Development Bank and the State Administration of Foreign Exchange jointly invested US$10 billion to establish the China-Arab Fund to invest in commercial projects in China. The first phase of the China-Arab Fund will invest US$4 billion, with both parties contributing 50%, in the direction of traditional energy, infrastructure construction and high-end manufacturing, clean energy and other high-growth industries.

Over the years, Mubadala's investment in China has mainly taken two forms: direct investment in shares and indirect investment through funded funds, and has successively invested in well-known companies such as Boss Zhipin, Kuaishou, Ziru, Wumart, JD Health, and Xiaopeng Motors. In 2023, it will set up an office in Beijing, and has successively invested in JD.com's unicorns JD Industry, Hasten Biotech, and super unicorn SHEIN.

"This investment is really led by PAG, and a lot of coordination has been done. Huang Dewei said, but such a large-scale investment is difficult to complete alone, and all other forces need to be gathered.

According to its disclosure, after signing the framework agreement with Wanda in December 2023, as independent investors, such as the Abu Dhabi Investment Authority or Mubadala, they need to make independent judgments, so since December last year, new investors have also decided to invest after conducting extensive due diligence on Wanda.

National Business Daily