Another 100 billion real estate giant sounded the alarm for delisting! The "white knight" who had just rushed to Wang Jianlin's aid was about to make a move? The stock price immediately rose and fell

Zhongnan Construction (000961. SZ), which is actively looking for strategic cooperation institutions.

According to market news, led by the Haimen District Government of Nantong City, Jiangsu Province, Zhongnan Construction Investment Co., Ltd., the controlling shareholder of Zhongnan Construction, and Asia's famous private equity investment company PAG (PAG) and Jiangsu Asset Management are negotiating cooperation in debt resolution and equity transactions. On the afternoon of April 20, the Daily Economic News reporter confirmed the news to Zhongnan Construction.

On April 22, Zhongnan Construction, whose stock price has been lower than 1 yuan / share for 11 consecutive trading days, ushered in the "one-word board" limit, with the latest stock price of 0.84 yuan / share and a market value of 3.21 billion yuan.

PAG, which plans to come to the rescue this time, has an asset management scale of more than 55 billion US dollars, and is known as Asia's "Little Blackstone" in the industry. A few days ago, the group formally signed an investment agreement in Dalian, and jointly invested about 60 billion yuan in Dalian Xindameng Commercial Management Co., Ltd. with Middle East Capital to carry out equity restructuring of Zhuhai Wanda Commercial Management.

The former real estate giant sounded the alarm of delisting

Zhongnan Construction is a listed company controlled by Chen Jinshi, the richest man in Nantong, Jiangsu.

On April 21, Zhongnan Construction issued a second risk warning announcement on the possibility of the termination of the listing due to the closing price of the stock being lower than 1 yuan in a row. According to the announcement, as of April 19, 2024, the closing price of the company's shares has been lower than 1 yuan per share for 11 consecutive trading days, and there is a risk that the listing may be terminated in accordance with the regulations.

It is understood that in the face of the delisting crisis, Zhongnan Construction held a research activity, and received the participation and support of the leaders of the Haimen District Government of Nantong City and well-known brokerage institutions. Moreover, as the base camp of Zhongnan Group, Haimen District reaffirmed the specific measures to help Zhongnan Construction cope with capital market risks.

According to the information provided by Zhongnan Construction, on February 19 this year, the Haimen District Government mentioned seven measures at the communication meeting on supporting the development of Zhongnan, including the establishment of a special group for government and enterprises in the capital market and the establishment of a rapid coordination mechanism; further coordination between the company and financial institutions to support and help the company to turn into debt; promote the cooperation between local state-owned construction enterprises and the company's construction business at the project level, and further support the company to participate in the construction of major local projects; support social capital to set up investment funds through market-oriented mechanisms, introduce strategic investors, and increase the company's shares; and marketizationUnder the premise of legalization, we will further explore the revitalization of the company's assets and provide necessary liquidity assistance, help the company's shareholders communicate with financial institutions, and coordinate with local courts to gradually resolve the risk of share pledge, accelerate the implementation of the company's whitelist project, and support the company to further do a good job in ensuring the delivery of buildings and ensuring people's livelihood.

At the beginning of this month, Nantong Construction and Transportation Group Co., Ltd., a subsidiary of Nantong Municipal Government, and Jiangsu Zhongnan Construction Industry Group Co., Ltd., a wholly-owned subsidiary of Zhongnan Construction, formally reached a strategic cooperation agreement, under which the two sides will cooperate in three fields: technology, general contracting and professional subcontracting, and jointly promote the market and business.

More than 30 years ago, the predecessor of Zhongnan Group, the parent company of Zhongnan Construction, was a construction contractor team, led by Chen Jinshi, 28 people, with a total of 5,000 yuan of capital to start a business.

In 2020, as the scale of the real estate industry reached its peak, Zhongnan Construction and its actual controller Chen Jinshi reached their peak. In that year, the contracted sales amount of Zhongnan Construction exceeded the 200 billion mark, and the cumulative contracted sales amount reached 223.8 billion yuan. With a net worth of 14 billion yuan, Chen Jinshi ranked 388th in China's "Hurun Report" that year, and also ranked first in Nantong, Jiangsu. Nantong is the hometown of Chinese architecture, and Chen Jinshi has become the leader of Nantong's "construction iron army".

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%.

Who is the PAG that is going to help?

Last year, a total of 12 real estate companies in Shanghai and Hong Kong were delisted. In the midst of the crisis, an equity deal is being negotiated between Zhongnan and PAG.

According to market news, led by the Haimen District Government of Nantong City, Zhongnan Construction Investment Co., Ltd., the controlling shareholder of Zhongnan Construction, is negotiating cooperation with Asia's famous private equity investment company PAG Investment Group (PAG) and Jiangsu Asset Management and other institutions. On the afternoon of April 20, a reporter from the "Daily Economic News" confirmed the news to Zhongnan Construction.

According to PAG's official website, the company is a private equity investment firm focused on the Asia-Pacific region, with business segments including private equity, real estate and credit and market investments. The company was founded in 2010 when co-founders Shan Weijian, Chris Gradel and Jon-Paul Toppino merged their three businesses to form PAG.

As of December 31, 2022, PAG managed more than US$50 billion in assets for nearly 300 institutional fund investors around the world, and is known as Asia's "Little Blackstone" in the industry.

As a key figure of PAG, Shan graduated from the University of International Business and Economics in Beijing (formerly known as the Beijing Institute of Foreign Trade) with a major in English in 1979, a master's degree in business administration from the University of San Francisco in December 1981, and 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.

Shan has over 28 years of investment management experience and founded PAG's private equity business in 2010. Prior to joining PAG, Shan served as Managing Partner at TPG Capital, Ltd. (formerly known as Newbridge Capital Ltd.) from February 1998 to June 2010 and as a Managing Director at JPMorgan Chase & Co. from 1993 to 1998.

The PAG Investment Group, which plans to make a move this time, is the one who pulled Wang Jianlin at the end of 2023.

National Business Daily reported that on December 12, 2023, PAG Investment Group and Dalian Wanda Commercial Management Group jointly announced the signing of an investment framework agreement to restructure the equity of Zhuhai Wanda Commercial Management. According to the agreement, Dalian Wanda Commercial Management holds 40% of the shares, and PAG Investment Group and other investors hold 60% of the shares. On this basis, on March 30 this year, PAG, CITIC Capital, Ares, a fund under Ares Management, Platinum Peony, a wholly-owned subsidiary of the Abu Dhabi Investment Authority (ADIA), and Mubadala Investment Company (Mubadala Investment Company) formally signed an investment agreement in Dalian to jointly invest about 60 billion yuan in Dalian Xindameng Commercial Management Co., Ltd.

60 billion yuan, this is 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.

Prior to Wanda Commercial Management, PAG's portfolio also included a number of well-known Chinese companies, such as iQiyi, Nai Xue's Tea, Sinopharm, Borui Biotech and Zhenai.

On March 27 this year, Shan Weijian published an article entitled "The Housing Market Can Be Saved", in which he expressed several of his core views, including: There is no serious oversupply of real estate in China; the rise and fall of the real estate market is related to the interests of thousands of households, and the downturn in the housing market is an obstacle in the return to normal economic growth; policies need to be further loosened to release potential demand; and reasonable debt restructuring requires major shareholders to take out equity and other assets to compensate creditors.

Editor|Lu Xiangyong Gai Yuanyuan

Proofreading|Wang Yuelong

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