BoE stress tests: all you need to know

The Bank of England has released the results of its latest round of its annual banking stress tests and its semi-annual financial stability report this morning. Used to measure the resilience of a bank’s balance sheet in adverse scenarios, the stress tests measured the impact of a severe slowdown in Chinese growth, a global recession […]

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Draghi: Eurozone will decline without vital productivity growth

It’s productivity, stupid. European Central Bank president Mario Draghi has become the latest major policymaker to warn of the long-term economic damage posed by chronically low productivity growth, as he urged eurozone governments to take action to lift growth and stoke innovation. Speaking in Madrid on Wednesday, Mr Draghi noted that productivity rises in the […]

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Asia markets tentative ahead of Opec meeting

Wednesday 2.30am GMT Overview Markets across Asia were treading cautiously on Wednesday, following mild overnight gains for Wall Street, a weakening of the US dollar and as investors turned their attention to a meeting between Opec members later today. What to watch Oil prices are in focus ahead of Wednesday’s Opec meeting in Vienna. The […]

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Banks, Financial

RBS emerges as biggest failure in tough UK bank stress tests

Royal Bank of Scotland has emerged as the biggest failure in the UK’s annual stress tests, forcing the state-controlled lender to present regulators with a new plan to bolster its capital position by at least £2bn. Barclays and Standard Chartered also failed to meet some of their minimum hurdles in the toughest stress scenario ever […]

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Barclays: life in the old dog yet

Barclays, a former basket case of British banking, is beginning to look inspiringly mediocre. The bank has failed Bank of England stress tests less resoundingly than Royal Bank of Scotland. Investors believe its assets are worth only 10 per cent less than their book value, judging from the share price. Although Barclays’s legal team have […]

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Categorized | Property

Wanda Commercial loses partner for backdoor mainland listing

Posted on November 22, 2016

A potential host for Wanda’s backdoor listing in China has pulled out of talks, causing a headache for Wang Jianlin, China’s richest man, as he seeks to replace a poorly-performing Hong Kong listing with the higher valuations offered in Shanghai and Shenzhen.

Shenzhen-listed Soft Rock Investment Group on Tuesday said it had dropped out of discussions over an asset-swap deal to restructure itself as Wanda Commercial Properties’ shell.

Mr Wang paid $4.4bn earlier this year to privatise Dalian Wanda Commercial Properties just 18 months after listing in Hong Kong. The privatisation was the biggest such deal by a Chinese group in the city and its success in relisting onshore is being closely watched as a template that others might choose to follow.

More than $12bn of take-private deals by Chinese companies globally have been announced this year, following $21.7bn last year, according to Dealogic. Most are believed to be seeking a mainland listing, where valuations are higher than those in New York or Hong Kong.

However, the potential for a wave of backdoor listings has raised concerns among Chinese regulators, worried that companies will escape the scrutiny of the initial public offering process by reversing into already-listed shells.

Shares in scores of companies suspected to be shells in search of a backdoor buyer have jumped in Hong Kong as well as the mainland this year as tighter bank funding conditions have pushed executives to seek other funding routes including public equity.

Shells in Shanghai and Shenzhen also provide a means of jumping the queue of several hundred mainland companies seeking regulatory approval for an IPO.

Soft Rock said in a statement to the Shenzhen bourse: “Because the relevant parties could not reach an agreement on the timeframe of this major restructuring, in order to protect shareholder interests … we have decided to end the restructuring plans.”

Wanda said it “only had preliminary contact” with Soft Rock and “did not enter formal discussions for restructuring Wanda Commercial Properties, nor did we reach any common purpose”.

Soft Rock had planned to buy all the shares in Wanda Commercial Properties and to fund the acquisition by selling fresh equity. The company disclosed in late September that it was to undertake a major restructuring with a target “in the finance and real estate sectors”.

Property is the bedrock of Mr Wang’s empire, although in recent years he has become better known for his moves into entertainment via theme parks, cinema chains and movie studios.

Moody’s warned earlier this year it considered the privatisation of Wanda Commercial Properties to be credit negative, and flagged its concerns over the potential for lower corporate transparency.

Meanwhile, Fitch Ratings revised its view on the business from stable to negative in September as a result of “fast-paced land acquisitions” for its Wanda Plazas, which are mixed-use developments.

“Wanda will continue generating negative free cash flow beyond 2017 unless the company can sustain an external funding model to expand its investment properties,” Fitch analysts said.