Shui On sells prime Shanghai property projects to China Life for 4 billion yuan
The sale, which includes three malls, is expected to generate a gain of 1.2 billion yuan for the developer as it pursues an ‘asset-light’ strategy
Shui On Land has struck a deal to sell almost half its stake in a portfolio of prime Shanghai property projects to China Life Insurance for 4.16 billion yuan (US$630 million), its latest move to pursue an “asset-light strategy”.
The sale is expected to generate a gain of 1.2 billion yuan for the property developer founded by tycoon Vincent Lo Hong-sui, it said in a filing to Hong Kong’s bourse late on Tuesday.
“In accordance with the ‘asset-light strategy’ which the Group has been pursuing since 2015, the transactions enable the group to optimise the value of some of its mature investment properties and to recycle its capital into other new opportunities,” it said.
The strategy involves partnering with financial institutions, land owners or other investors to diversify funding sources and reduce capital outlay and debt load when financing projects, it added.
State-backed China Life Insurance, the nation’s largest life insurer, will form a partnership with sister firm China Life Properties to make the purchase.
China Life Insurance said it will contribute virtually the whole amount while 100,000 yuan will come from China Life Properties.
The funds will be used to buy 21.4 per cent of Shanghai Ruihong Xincheng – a subsidiary of Shui On Land.
The purchase will give the 20-year partnership a 49.5 per cent interest in three shopping malls and an office and commercial complex with gross floor area of 280,000 square metres, which are under construction.
