China regulator questions Dalian Wanda on unit’s HK IPO plan

CHINA’s securities regulator is scrutinising a unit of conglomerate Dalian Wanda Group about US$4.4 billion in payments it might have to make if a mainland mall business does not go public in Hong Kong this year. 

The China Securities Regulatory Commission (CSRC) sent a letter to Dalian Wanda Commercial Management Group, inquiring about the delayed initial public offering (IPO) of Zhuhai Wanda Commercial Management, and how it might affect the group’s debt-repayment capabilities. 

Wanda Commercial may have to repurchase about 30 billion yuan (S$5.8 billion) of equity from pre-IPO investors if a listing does not happen by the end of 2023, as indicated by a CSRC query posted on its website.

S&P Global Ratings cut its ratings outlook on Wanda Commercial last August, saying then that the firm and Wanda Group would face “large liquidity pressure” if Zhuhai Wanda’s IPO was unsuccessful. The ratings firm said that it treated 39.5 billion yuan of pre-IPO funds as debt.

The CSRC’s questions came after major developer China Evergrande scrapped plans in late 2020 for a backdoor mainland listing, capping a four-year saga that raised fears of a cash crunch. Those worries mushroomed the following year amid the real-estate sector’s liquidity squeeze. 

Wanda Group, which has a large property business, initially delayed the unit’s IPO a year ago because of market volatility, Bloomberg reported at the time. The deal could have raised about US$3 billion. A third IPO application was filed in October with Hong Kong’s stock exchange; such applications lapse after six months.

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A media representative at Dalian Wanda did not immediately comment when reached on Wednesday (Mar 22).

Wanda Commercial this week priced a 1.5 billion yuan three-year bond. Another unit, Wanda Properties Global, is among the few Chinese developers to issue new dollar notes this year. Both of those new offshore bonds are yielding about 19 per cent, as indicated by prices compiled by Bloomberg. BLOOMBERG