China Fund News Amman
At the critical moment, Zhongnan Construction may usher in its "white knight......
According to market news, on the afternoon of April 20, led by the People's Government of Haimen District, Nantong City, Zhongnan Urban Construction, the controlling shareholder of Zhongnan Construction, negotiated cooperation with PAG Investment Group (PAG), a well-known private equity investment company in Asia, and Jiangsu Asset Management and other institutions.
Zhongnan Construction also confirmed the above news to the media. It is worth noting that the PAG that shot this time just pulled Wang Jianlin at the end of last year.
200 billion real estate giants
The delisting alert has been sounded
On the evening of April 18, Zhongnan Construction issued an announcement reminding that as of that day, the closing price of the company's shares had been lower than 1 yuan per share for 10 consecutive trading days, and there was a risk that the listing might be terminated in accordance with the above regulations.
Just one day earlier, on April 17, Zhongnan Construction invited local government leaders to the site of the research activity. The local government introduced seven support measures, including the establishment of a government-enterprise task force in the government capital market and the establishment of a rapid coordination mechanism to help enterprises cope with capital market fluctuations. On the day of the meeting, Zhongnan Construction rose 8.75%.
However, on April 18, Zhongnan Construction's share price fell by 3.45% again, and the stock price closed at 0.84 yuan. With the announcement of possible delisting, on April 19, Zhongnan Construction's share price approached the fall limit.
In recent years, with the overall recession of the real estate industry, the performance of Zhongnan Construction, which had a sales scale of more than 200 billion yuan at its peak, has also fallen off a cliff.
According to Zhongnan Construction's 2023 performance forecast, its net profit attributable to the parent company in 2023 will be between -5 billion yuan and -3 billion yuan, while its net profit attributable to the parent company in 2022 will be -9.17 billion yuan. This is the answer to Zhongnan Construction's losses for three consecutive years.
According to its released sales data, in the first quarter of 2024, the cumulative contracted sales of Zhongnan Construction were only 4.73 billion yuan, a year-on-year decrease of 38%.
According to its third quarter report in 2023, Zhongnan Construction's total assets are about 280 billion yuan, and its total liabilities have reached 256 billion yuan, with an asset-liability ratio of more than 90%.
What is PAG?
The PAG that shot this time was the person who pulled Wang Jianlin at the end of last year.
On December 12, 2023, there was a new development in the listing of Zhuhai Wanda Commercial Management, and PAG signed a new agreement with Wanda, with Dalian Wanda Commercial Management holding 40% of the shares as the single largest shareholder, while PAG and other institutions holding a total of 60% of the shares. For Wang Jianlin, this means that the imminent "gambling crisis" is lifted, and it also means that nearly half of Wanda's core assets are "handed over".
It is understood that PAG is a private equity firm specializing in investing in Asia, known as the "Little Blackstone of Asia", and its business covers private equity, real estate investment and private credit and other fields.
PAG has 760 employees in 15 offices around the world, who collectively manage more than $55 billion in assets for nearly 300 institutional fund investors around the world.
In recent years, PAG has been active in the field of PE investment in the Asia-Pacific region, with well-known investment projects such as Zhenai.com, Wanda Commercial Management, Universal Studios Osaka, Tencent Music, Nai Xue's Tea, etc.
According to its prospectus submitted in 2022, PAG has invested more than US$70 billion since its inception and has realised more than US$40 billion.
The 70-year-old founder turned out to be a student of Yellen
The core figure behind PAG is its founder, Shan Weijian.
According to the previous China Investment Network report, in 1954, Shan Weijian was born in Beijing, after graduating from primary school, the vigorous mountain to the countryside began, in September 1969, only 15-year-old Shan Weijian was sent to the Gobi of the Inner Mongolia Construction Corps, a stay is 6 years.
During the six years in the Gobi, even though he planted potatoes in saline-alkali land, dug potatoes, built ditches, and fired brick kilns, he did a lot of useless work, but he never pulled down his studies. In September 1975, Shan Weijian returned to Beijing and entered the University of International Business and Economics in Beijing, majoring in English.
Four years later, Shan Weijian set off to study in the United States. He received a master's degree in business administration from the University of San Francisco in December 1981, a master's degree in economics and a doctorate degree in business administration from the University of California, Berkeley in December 1984 and May 1987, respectively. And his mentor turned out to be the current US Treasury Secretary Janet Yellen.
In her preface to Shan's Out of the Gobi, Yellen said: "His [Shan's] life experience, even if it was just a coincidence, shows that China and the United States together will be enough to achieve anything." ”
After graduating, Shan Weijian also made his way in the workplace, working for many well-known institutions such as the World Bank, Graham & James Law Firm, and teaching management at the Wharton School of the University of Pennsylvania.
In 1993, Shan was appointed Managing Director of JP Morgan. Subsequently, he joined Texas Pacific Group (TPG), an overseas PE giant, and was responsible for the Greater China business. During this period, Shan was a partner at Texas Pacific Group (TPG) and co-managing partner of TPG Asia (formerly known as Newbridge Investment Group).
During the Asian financial crisis, Shan Weijian led TPG's subsidiary, Xinqiao, to successfully acquire First Bank of Korea and turned a profit within a year. Then, in 2004, Shan Weijian presided over and led the Xinqiao team to successfully become the owner of Shenzhen Development Bank (the predecessor of Ping An Bank). After completing a series of changes and transformations to the former Shenzhen Development Bank, it was sold to Ping An of China, creating an astonishing return of more than $2.4 billion from an investment of US$150 million.
These two major acquisitions have made Shan Weijian famous in the industry and has been praised as the "king of PE" by Fortune magazine.
After moving to PAG, Shan co-founded PAG's private equity business in 2010. In the same year, Shan's private equity business was integrated with Chris Gradel's credit and markets business and Jon-Paul Toppino's real estate business to form a diversified multi-strategy investment firm. Shan Weijian is an executive director and executive chairman of the Board, Chris Gradel is an executive director and chief executive officer, and Jon-Paul Toppino is an executive director and president.
According to the financial report, PAG's AUM has grown about sixfold over the past decade, with the support of nearly 300 institutional investors. In terms of earnings, the gross internal rate of return (IRR) of the three core divisions exceeded 20%, and the net return after deducting management fees continued to exceed 15%.
It is worth noting that in February this year, PAG signed a cooperation agreement with Suzhou High-tech Zone to "settle" PAG China in Suzhou to coordinate the development of the company's various asset management businesses in China and cooperate with its business operations in China.
At the end of March, Shan Weijian also published an article in the "Securities Market Weekly" saying that China's housing market does not have a serious oversupply problem, but it has not yet turned the corner, because demand and prices are still suppressed by policies, blocking the mechanism for the market to establish a new equilibrium point. For now, consideration should be given to an immediate and comprehensive easing of restrictions and a return to the market's self-regulating function to avoid a prolonged weak recovery due to excessive corrections on both the supply and demand sides. In this way, the market can be quickly stabilized, the role of this pillar industry can be restored, and the public can regain confidence in the value of real estate and the willingness to spend, thereby driving economic growth.
It can be seen that Shan Weijian is still very optimistic about China's economic growth. In the eyes of industry insiders, if Shan Weijian, who is good at controlling mergers and acquisitions, really comes to the rescue, Zhongnan Construction may usher in a glimmer of life.
Editor: Captain
Review: Muyu