China Everbright unit makes offer for Ying Li International

A UNIT of China Everbright (CEL), called State Alpha, is making a mandatory unconditional cash offer for Chongqing-based property developer Ying Li International Real Estate at S$0.14 per share.

The offer was triggered after the offeror bought about 767.1 million shares, representing about 30 per cent of the shares in the company, from Newest Luck Holdings on Wednesday.

With this, its stake, combined with parties acting in concert, became 58.91 per cent. The concert parties comprise entities that hold perpetual subordinated convertible securities of Ying Li, and which are related to CEL.

The offeror plans to keep Ying Li listed and so does not plan to exercise any right of compulsory acquisition, but said that it will re-evaluate if the free float requirements are not met at the close of the offer.

CEL is China's leading cross-border investment and asset management company. The acquisition will result in CEL securing majority control of Ying Li.

When the offer closes, the offeror may also undertake a strategic and operational review of the organisation to realise its synergies and growth potential.

This "may involve the disposal or cessation of underperforming businesses and assets and the redeployment of certain employees of the company and its subsidiaries". It will also consider options and opportunities that may present themselves to the company over time.

The offeror also believes that CEL will be able to support Ying Li's strategy and growth plans over the medium to long term by leveraging on the former's expertise, execution capabilities, network and strong relationships with local authorities.

The acquisition and offer are also expected to improve Ying Li's company profile in the equity and debt capital markets, which could enable it to attract more extensive research coverage and may possibly lead to an overall increase in investor interest and trading liquidity in the shares, leading in turn to higher market valuations.

The offer price represents a 10.9 per cent premium to the volume-weighted average price of the shares for the three-month period prior, although also a 66.1 per cent discount to the company's net asset value per share as at end-2018.

Ying Li has an issued and paid-up share capital of about S$855.8 million. Its market capitalisation as at Wednesday is S$355.4 million. Its shares closed 0.7 per cent higher at S$0.139 on Wednesday.

DBS Bank is acting as financial adviser to the offeror.