Shenzhen Metro becomes Vanke's top shareholder; long dispute ends

Updated 2017-06-12 09:32:42 Global Times

As China Evergrande Group signs a groundbreaking share transfer deal with the Shenzhen Metro Group, Vanke's situation has become clearer after a two-year dispute with major shareholders.

Domestic developer China Evergrande Group signed a deal to transfer 14.7 percent of the shares it owns in China Vanke Co to Shenzhen Metro Group on Friday.

The deal makes the latter Vanke's largest shareholder with a stake of 29.38 percent.

This means that Vanke's two-year share dispute with its former largest shareholder has come to an end.

China Evergrande sold all its shares in Vanke to Shenzhen Metro for 29.2 billion yuan (.3 billion), the developer said in a statement posted on the Hong Kong Exchanges and Clearing website.

Financial conglomerate Baoneng Group is now the second-largest shareholder, holding 25.4 percent of the developer's shares.

Vanke's shares are scheduled to resume trading on Monday after suspension on Wednesday, according to the company's announcement to the Shenzhen Stock Exchange.

The transaction will help optimize the equity structure of Vanke, promoting the sound development of the share market as well as the local economy, Shenzhen Metro said in a statement on its website on Friday. The group will help maintain Vanke's sound development with other shareholders, the statement said.

The share dispute over Vanke began in mid-2015, when Shenzhen Jushenghua and Foresea Life Insurance, two units of Baoneng, started to build up stakes in Vanke. The group subsequently continued to buy shares of Vanke and became the developer's largest shareholder on December 7, 2015, with a stake of 20 percent, according to a statement by Vanke on the same day.

However, Vanke Chairman Wang Shi had a hostile attitude toward Baoneng and even called it a "barbarian," according to a Xinhua News Agency report in December 2015. The dispute persisted for the past two years.

China Evergrande helped solve the problem despite taking a loss of 7 billion yuan, displaying its social responsibility as a Fortune Global 500 enterprise, Xinhua reported Friday, citing a market analyst.

On December 5, 2016, the China Insurance Regulatory Commission ordered Foresea Life Insurance to suspend universal life insurance business, curbing Baoneng's source of capital increases that it had often used to buy stakes in listed companies, Beijing Business Today reported the same day.

As the high-profile dispute among Vanke's major shareholders and its management ends, the company's management board election becomes the next major uncertainty, domestic news portal yicai.com reported on Friday.

"The game among Shenzhen Metro, Baoneng and Vanke's management and the (board) will influence the developer's future," continued yicai.com.

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