BEIJING - Dalian Wanda Group, the Chinese conglomerate, has proposed a new share issuance to pre-IPO investors of its subsidiary Zhuhai Wanda Commercial Management Group. The offer, made today, comes as part of a revised strategy to manage over 30 billion yuan in repayments plus interest that are due in three weeks. This move values the company at around 100 billion yuan (USD1 = CNY7.1568), which is roughly half of its valuation during a funding round in 2021.
The proposal is part of ongoing negotiations led by investment firm PAG, which could lead to a significant shift in the company's ownership structure. Wang Jianlin, who currently holds over 78% of Zhuhai Wanda, may see his stake diluted below majority. This recapitalization plan is crucial for obtaining regulatory approval for the company's anticipated initial public offering (IPO), especially in the current challenging financial climate characterized by high borrowing costs and stringent regulations within China's property sector.
Zhuhai Wanda, which specializes in mall management, has been proactive in its approach to going public, having filed for its fifth IPO attempt as of November. The preliminary prospectus revealed an impressive list of pre-IPO investors, including tech giants Ant Group and Tencent Holdings (OTC:TCEHY). These marquee backers support Zhuhai Wanda's business model and growth prospects despite the broader market headwinds.
The move to issue new shares instead of delaying cash repayments indicates a strategic pivot by Dalian Wanda Group in response to the tightened financial conditions affecting China's real estate market.
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