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Article丨20 Agency, Author丨The Nine Commandments of Pigs and Li Xianhuan, Editor丨Wang Xiaoling
Article丨20 Agency, Author丨The Nine Commandments of Pigs and Li Xianhuan, Editor丨Wang Xiaoling
On the evening of June 16th, according to SOHO China’s official official account, Blackstone Group issued a comprehensive takeover offer to obtain a controlling stake in SOHO China. After the transaction is completed, SOHO China’s existing shareholders will retain 9% of the equity and continue to stay in it. Listed in Hong Kong.
Soon after the SOHO China official public account was issued, SOHO China issued an announcement on the Hong Kong Stock Exchange stating that Goldman Sachs, on behalf of Blackstone Group, had acquired a total of approximately 2.856 billion shares of SOHO China at a price of HK$5 per share. The transaction price was approximately HK$23.656 billion, equivalent to RMB About 19.5 billion yuan (about 3.03 billion US dollars).
Rumors of this transaction have been circulating in the market for nearly two years, and it was finally completed after several discounts.
Transaction announcement
On October 31, 2019, according to media reports such as Caixin, SOHO China is preparing to sell its domestic office buildings for US$8 billion. The potential transaction parties are the Blackstone Group and related consortia. The next day SOHO China responded to the news that the company was not aware of any information related to the sale of the group’s assets that needed to be announced, but said at the same time: “The Group will discuss from time to time the commercial real estate market environment and potential trading opportunities in the group’s main markets.”
On March 10, 2020, SOHO China again reported privatization news. The Blackstone Group was reported to have privatized SOHO China at a price of 6 Hong Kong dollars per share, and the transaction price was 4 billion Hong Kong dollars. In addition, the Blackstone Group will also take over SOHO China’s debt. But in August last year, the privatization process was terminated. In November 2020, news of SOHO China’s privatization was once again reported in the market, but the transaction partner changed from Blackstone Group to Hillhouse Capital. But Hillhouse Capital quickly denied the market rumors, saying that it had no intention of participating in the privatization of SOHO China, and SOHO China also stated that the rumors were untrue. Starting from October 2019, SOHO China’s “hands-off process” has been delayed for nearly two years. From the beginning, the overall sale was compromised to privatization, and the privatization process was once terminated, and the final sale price was also greatly reduced. Pan Shiyi’s process of selling SOHO China was not smooth. But for Pan Shiyi, the current trading hammer is basically a matter of mind-selling out most of the core assets in China, and cash in pockets. After the transaction is completed, SOHO China Chairman Pan Shiyi and Executive Director Zhang Xin will successfully cash out HK$14.28 billion. 01. Seven years of selling buildings Pan Shiyi’s history of selling and selling can be traced back to at least 2014. In February of that year, SOHO China sold its SOHO Hailun Plaza and SOHO Jing’an Plaza and their equity in Shanghai to Financial Street Holdings for a price of 5.23 billion yuan. The background of this transaction is that since 2009, Pan Shiyi began to invest heavily in Shanghai. Until the end of 2013, Pan Shiyi said that SOHO China’s investment in Shanghai has reached 50 billion yuan, accounting for 75% of the total SOHO. . In fact, the above two projects were acquired by SOHO China with a fierce momentum after entering Shanghai. In 2011, SOHO China acquired these two plots for 1.634 billion yuan and 2.47 billion yuan respectively. But only three years after the project was put in the pocket, it was sold for 5.230 billion yuan, a premium of only 1.126 billion yuan. At first, Pan Shiyi’s expected income from this transaction was 12 billion yuan, and the price was discounted by more than half of the expected income. At that time, industry insiders believed that this seemingly buy-low-sell transaction, including three years of capital costs and management costs and other financial expenses, the final profit margin was not high, and it was not in line with Pan Shiyi’s “sell potatoes at the gold price.” “style of. It is hard to say that it was just a coincidence. In 2013, Li Ka-shing had just sold the Lujiazui Oriental Huijin Center for 7.1 billion yuan in 2013. The two gradually retreated from Shanghai one after the other, keeping pace with each other and full of understanding. However, Pan Shiyi himself said at the time that holding and operating high-quality office properties in Beijing and Shanghai is still SOHO China’s long-term development strategy and will not change. In fact, this is just the beginning of Pan Shiyi’s sale of the SOHO series. According to incomplete statistics, SOHO China has sold more than 30 billion yuan in assets since 2014. In September 2014, Pan Shiyi sold 100,000 square meters of Shanghai Lingkong SOHO to Ctrip for a price of 3.05 billion. At that time, Lingkong SOHO had not yet opened. After the sale was completed, SOHO China still held 118,200 square meters of Lingkong SOHO as investment properties. . Three years later, this part of the assets was also emptied by Pan Shiyi and sold to the well-known Hong Kong private equity company Gaw Capital at a price of 4.944 billion yuan. In September 2015, SOHO China sold a 50% stake in the Shanghai Bund 8-1 plot to Fosun at a price of RMB 8.493 billion. In order to compete for this piece of land, SOHO China and Fosun once went to court. In July 2016, SOHO China sold SOHO Century Plaza to Guohua Life Insurance Co., Ltd. for a transaction price of more than 3.2 billion yuan. On June 26, 2017, SOHO China disclosed an announcement, announcing the whole sale of Shanghai Hongkou SOHO for 3.573 billion yuan. Less than 10 days later, on July 4, Pan Shiyi announced the start of the package sale of the Guanghua Road SOHO2 and Lingkong SOHO projects. Regarding the practice of frequently selling assets, Pan Shiyi once explained, “The always-changing law of doing business is to buy when the price is low and ship when the price is high. SOHO China will always follow this principle. Always judge when the price is low. , When is the price high.” After entering 19 years, Pan Shiyi’s pace of selling has accelerated. On June 28, 2019, Pan Shiyi announced that SOHO China will sell 13 office property projects in Beijing and Shanghai in batches, with an estimated total value of RMB 7.8 billion. On September 30, SOHO China once again announced the sale of 9 commercial asset packages in Beijing for 761 million yuan, mainly containing 2,583 underground parking spaces. On October 22, SOHO China’s co-working brand SOHO3Q packaged and sold 11 projects in Beijing and Shanghai to the incubator company Dreaming Star. However, these are all peripheral assets. The highlight is naturally the most important core asset known as the “Eight King Kong”: Beijing’s Qianmen Project, Lize SOHO, Guanghua Road SOHO, Wangjing SOHO Tower 3, and Shanghai’s SOHO Fuxing Plaza and Gubei SOHO. , SOHO Tianshan Square, Bund SOHO. Following yesterday’s SOHO China statement, these core assets were finally packaged for sale. And just three years ago, Pan Shiyi once said that SOHO China has two projects that can never be sold: “The Bund SOHO is one, the location is too important; Wangjing SOHO cannot be sold, it is too beautiful, I like it very much.” It seems that Boss Pan’s words are unbelievable, including since 2013, he has been bearish on the Chinese property market for many years, and while telling young people not to buy houses, he is frequently beaten by reality. 02, from heavy to light, lying down too early? One of the major backgrounds for Pan Shiyi’s liquidation of Chinese assets is that SOHO China has fallen into a growth dilemma since it switched from a sales model to a holding model in 2012, and its revenue immediately dropped from the tens of billions to the billions level, and the net profit level has long since been reached. Not as good as that year. According to SOHO China’s financial report, SOHO China’s revenue in 2019 and 2020 will be 1.847 billion yuan and 2.192 billion yuan, and net profits will be 1.331 billion yuan and 536 million yuan respectively. In contrast, in 2012 before the transformation, SOHO China achieved revenue of 15.3 billion yuan and net profit of approximately 10.6 billion, of which core net profit was 3.34 billion yuan. In fact, since 2014, SOHO China has never purchased new property projects in China. While selling houses in China, Pan Shiyi and his wife turned to overseas, especially the United States. Statistics show that since 2011, Pan Shiyi and Zhang Xin and his wife have invested a large number of overseas assets through family trusts. The fixed assets they acquired include the office building of the Port Authority’s bus station next to Times Square in Manhattan, New York, and 49% of Manhattan Park Avenue Plaza. And the joint Brazilian consortium to acquire a 40% stake in the General Motors Building in the United States. In addition to the investment of the couple, their two children also went to Yale and Harvard to study. In the process of continuously selling domestic assets for seven years, Pan Shiyi and his wife have repeatedly faced doubts about “running off the road”, but Pan Shiyi himself has repeatedly denied it. In November 2019, in response to market rumors, Pan Shiyi responded at the customer signing ceremony held by Lize SOHO, saying: “I always say that I ran away. It’s all rumors and can’t get away.” Earlier in August 2017, at the SOHO China Interim Results Conference, Pan Shiyi said in response to the sale of assets: “It is a misunderstanding that we are going to run with Li Ka-shing and Wang Jianlin.” “Where can we go? It’s right to say that we are shifting from an asset-heavy model to a light-asset model, to a platform-based sharing economy model.” Now it seems that Pan Shiyi’s light asset model is indeed very light, so light that there is nothing left. For more exciting content, follow Titanium Media WeChat ID (ID: taimeiti), or download Titanium Media App
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