Date
20 September 2017
Greenland logo displayed at a construction site in Jeju, South Korea. The Chinese developer plans to list in Shanghai through an asset swap with an affiliate. Photo: Bloomberg
Greenland logo displayed at a construction site in Jeju, South Korea. The Chinese developer plans to list in Shanghai through an asset swap with an affiliate. Photo: Bloomberg

Greenland Group shows the way in new SOE reform

Real-estate developer Greenland Group’s backdoor listing in Shanghai has a good chance of being the largest such deal in the mainland’s A-share markets. The landmark transaction deserves some extra attention as it could also be showing the way for new state-owned enterprise (SOE) reforms in China.

Top policymakers have recently issued fresh calls to diversify shareholding structure at SOEs, even though it means state capital may lose its majority shareholding status with a voting right of less than 50 percent.

Shanghai-based Greenland, a member of the Fortune Global 500 elite club and China’s second largest property developer in terms of sales volume, will inject all of its outstanding shares into Shanghai Jinfeng Investment Co. Ltd. (600606.CN) to achieve a listing status indirectly.

Media reports say Shanghai’s State-owned Assets Supervision and Administration Commission (SASAC) has pinned high hopes on the listing, expecting it to serve as a template for the city’s other SOEs to bring in private investors for a vibrant, mixed-equity ownership to scale new heights in development.

Ahead of the proposed backdoor listing, Greenland sold more than two billion shares, or 20 percent of the equity, for 11.73 billion yuan through the Shanghai United Assets and Equity Exchange last December to enlarge its share capital. Five investors from Shanghai, Ningbo, Shenzhen and Zhuhai subscribed to the bulk of the shares. According to the Southern Weekend, Shenzhen-based financial conglomerate Ping An bought half of the Greenland shares on sale.

Also, behind these proxy investors from Shanghai, Ningbo and Zhuhai are a string of prestigious funds and private firms including Tsinghua University Education Fund, National Social Security Fund, Orient Securities, China Universal Asset Management {匯添富基金}, Huawei Technologies, Peak Sport Products (01968.HK) and garment manufacturer Septwolves Industry (002029.CN).

With the share sale, the stake owned by Shanghai’s state-assets regulator in Greenland has been cut by almost 13 percentage points to 46 percent, below the symbolic 50 percent level that was previously a baseline at major SOEs.

Shanghai SASAC is said to have assured Greenland’s new shareholders that it will refrain from meddling in the firm’s day-to-day business operation, and that other state-linked stake owners will also not interfere in the management.

– Contact the writer at [email protected]

RC

EJ Insight writer

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