Shui On Land Ltd., in the pursuit of its asset-light strategy, is divesting a 49.5% stake in a portfolio of Shanghai properties to a limited partnership managed by China Life Capital Investment Co. Ltd. for nearly 3.87 billion yuan, subject to adjustments.
Under the deal, Shui On Land subsidiary Hollyfield Holdings Ltd. will sell its stake in the Sino-foreign cooperative joint venture Shanghai Rui Hong Xin Cheng Co. Ltd., the direct owner of the portfolio, to the China Life Insurance (Group) Co.-affiliated fund.
The portfolio comprises assets and undeveloped land plots in the Rui Hong Xin Cheng project, with a gross saleable and leaseable floor area of 110,795 square meters and 562 ancillary car parking lots. As at June 30, the net asset value of the properties is estimated at roughly 5.57 billion yuan.
After the completion of the deal, the property portfolio will be held 49.5% each by Hollyfield Holdings and the China Life fund and 1%-owned by Shanghai Hongfang (Group) Co. Ltd.
According to a filing, Shui On Land no longer has to hold an extraordinary general meeting to seek approval for the deal as it was already green-lit by shareholders who collectively hold a roughly 56.84% stake in the company. Directors of the company also approved the deal, the terms of which were deemed fair and reasonable by Shui On Land's nonexecutive directors.
Net proceeds from the transaction, expected at about 3.61 billion yuan, will be used by the company to repay offshore debt with near-term maturity, and the remainder will be earmarked for general working expenditures of the group.
As of Dec. 19, US$1 was equivalent to 6.60 yuan.