Property and entertainment conglomerate Dalian Wanda Group on Monday offered to buy out its Hong Kong-listed arm at a price of around HK$34.5 billion ($4.4 billion), in a move to seek a higher valuation in the capital market on the Chinese mainland.
A consortium of investors, led by Dalian Wanda Group, offered to acquire all of the issued H shares in Dalian Wanda Commercial Properties Co at HK$52.8 each, an increase of 10 percent over the initial minimum offer of HK$48 per share made on March 30. The latter figure was the IPO price.
The price also represents a premium of about 44.5 percent over the closing price on March 29, one day before the initial offer was announced.
The consortium won't increase the offer price, it said in a statement sent to the Global Times on Monday.
Shares in Dalian Wanda Commercial Properties Co fell 1.5 percent after they resumed trading on Monday afternoon and closed at HK$49.25.
The offer came just 17 months after the company got listed in Hong Kong, as increasing number of overseas-listed companies shift to the mainland capital market for higher valuations.
Since the beginning of 2015, over 40 U.S.-listed Chinese companies have announced plans to go private, media reports said. This trend is also seen among Hong Kong-listed companies based in the mainland, analysts said. For example, Hong Kong-listed Peak Sport Products Co announced its privatization plan on May 24.
Xu Guangfu, a senior analyst at Shanghai Yinji Asset Management Co, said that as valuations in the mainland are generally higher than in Hong Kong or the U.S., there is a great possibility that Dalian Wanda Commercial Properties can secure a higher valuation by shifting its listing.
The Beijing News reported on Friday that instead of seeking a "backdoor listing," the company will pursue a mainland IPO.
The wave of overseas-listed companies seeking to shift their listings has caught the attention of the authorities, as these IPOs or "backdoor listings" will drain market liquidity and possibly cause volatility, analysts said.
The China Securities Regulatory Commission said in May that it "will launch an in-depth analysis" on such efforts.
"As long as moves by these companies are conducted in an orderly manner, there won't be any major volatility in the mainland market," Li Daxiao, chief economist at Shenzhen-based Yingda Securities, told the Global Times Monday.
