real estate | Amid power tussle, Hong Kong fund lifts its stake in China Vanke
The company logo of China Vanke is displayed at a news conference announcing the property developer's interim results in Hong Kong, China August 22, 2016.  REUTERS/Bobby Yip
The company logo of China Vanke is displayed at a news conference announcing the property developer's interim results in Hong Kong, China August 22, 2016. REUTERS/Bobby Yip

Amid power tussle, Hong Kong fund lifts its stake in China Vanke

August 31, 2016 3:01 AM (UTC+8)

 

By Clare Jim

HONG KONG (Reuters) – A Hong Kong-based fund has further increased its stake in China Vanke Co Ltd, the country’s biggest property developer currently embroiled in a high-profile power struggle, sending shares in Vanke higher.

The total amount of Vanke shares owned by Nexus Capital Management remains small, but the fund is reportedly close to China Evergrande, the country’s second largest property developer which has recently built up a near 7% interest in Vanke. That in turn has fanned market speculation that Vanke’s shares will continue to be in demand.

The company logo of China Vanke is displayed at a news conference announcing the property developer's interim results in Hong Kong, China August 22, 2016.  REUTERS/Bobby Yip
The company logo of China Vanke is displayed at a news conference announcing the property developer’s interim results in Hong Kong, China August 22, 2016. REUTERS/Bobby Yip

Vanke, which has a market value of nearly $40 billion and annual revenue of $28 billion, is battling financial conglomerate Baoneng which has acquired 25% of the company over the past year and has tried to oust its board.

The emergence of Evergrande as a key shareholder has taken the market by surprise. Neither Evergrande nor Nexus have made intentions concerning their holdings in Vanke clear.

Nexus said in a stock exchange filing on Wednesday that it has marginally lifted its holding to own 11.5% of Vanke’s Hong Kong-listed shares. That represents a 1.4% interest in total shares of Vanke, which is also listed in Shenzhen, according to Reuters calculations.

Nexus first reported a 7.3% interest in Vanke’s Hong Kong shares on Aug. 9, and lifted its stake at least three times since.

Hong Kong newspaper Mingpao reported this month that Nexus Capital is owned by Cheung Chung Kiu, the chairman of Chinese property developer C C Land and a good friend of Evergrande chairman Hui Ka Yan.

Nexus Capital and Vanke declined to comment. C C Land and Evergrande did not respond to requests for comment from Reuters.

Vanke’s Hong Kong-listed stock rose 2% in Wednesday afternoon trade while its Shenzhen shares jumped 10 percent.

Fearing a hostile takeover by Baoneng, Vanke’s management announced in June a $6.9 billion deal with white knight Shenzhen Metro Group but it is unclear whether it will succeed.

Both Baoneng and China Resources, Vanke’s second-largest shareholder with a 15% holding, have said they oppose it. China Resources has not, however, sided with Baoneng in its efforts to oust the board.

A decision by Fitch ratings agency to maintain its credit rating and outlook on Vanke also supported the stock on Wednesday. That contrasted with decisions by Standard & Poor’s and Moody’s Investors Service last week to lower Vanke’s outlook to negative due to the uncertainty surrounding the company.

(Reporting by Clare Jim; Editing by Edwina Gibbs)

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