(Bloomberg) — Dalian Wanda Group Co. has agreed to cede control of its shopping mall unit in a deal worth 60 billion yuan ($8.3 billion), implementing a December agreement to restructure Zhuhai Wanda.
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Investors led by PAG will hold a combined stake of 60% in Newland Commercial Management, a newly formed holding company of Zhuhai Wanda Commercial Management Group Co., according to a statement on Saturday. Dalian Wanda Commercial Management Group Co. will control the remaining 40%.
The deal “reflects the expectation and recognition of Newland’s long-term growth potential by international institutional investors,” David Wong, PAG partner and co-head of private equity, said in the statement. Other investors include CITIC Capital, funds managed by Ares Management, the Abu Dhabi Investment Authority and Mubadala Investment Company.
The investment will facilitate corporate governance independent from Newland’s former parent, provide better incentives for its management and support continued operational improvement, according to the statement. The company manages 496 large-scale shopping malls in 230 cities across China, with about 70 million square meters of floor space under management, it said.
Billionaire founder Wang Jianlin gave up control in Zhuhai Wanda in December as part of a landmark agreement to avoid repaying pre-IPO investors. Under the terms of the original investments, Wanda agreed to repay investors 30 billion yuan ($4.2 billion) plus interest if Zhuhai Wanda could not get its initial public offering done by the end of 2023.
When that deadline came and there was still no listing, a new agreement was proposed where Wang relinquished control and pre-IPO investors took a bigger stake — 60% combined. The pre-IPO investors include PAG, which put in $2.8 billion, Ant Group Co., Citic Securities Co. and Tencent Holdings Ltd.
The deal announced Saturday carried no earnout provisions, nor did the investors request a listing date from Wanda regarding the mall operation business, Cailian reported, citing people familiar with the matter.
Wanda was once seen as one of the few high-quality Chinese issuers in the junk-bond market thanks to its focus on commercial real estate as well as its asset-light property management business. The conglomerate came under pressure after borrowing costs surged and Beijing cracked down on the property sector.
—With assistance from Amanda Wang.
(Updates with company comment in fourth paragraph, details of earlier agreement from fifth.)
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