Once the darlings of the new generation of Chinese entrepreneurs, husband and wife founders Pan Shiyi and Zhang Xin are poised to sell control of their real estate operation to the American investment group
(AF) Shares in SOHO China, one of China’s largest commercial real estate developers, soared by 21% at the Hong Kong stock exchange on Thursday after Blackstone Group offered to acquire most of the company’s shares in a transaction worth HK$23.7 billion ($3.05 billion).
The deal comes as China’s economy continues to rebound from the Covid-19 pandemic, and signals the American investment firm’s confidence in the country’s longer-term prospects.
According to a statement by the property developer, Blackstone will purchase 54.93% of SOHO China’s shares at HK$5 ($0.64) per share from billionaire and SOHO founder Pan Shiyi.
The price represents a 31.6% premium compared with SOHO’s closing price of HK$3.80 ($0.49) on Wednesday, but a 16.7% discount from an earlier offer of HK$6 ($0.77) in March 2020, also made by Blackstone.
SOHO China’s stock price rose 21% on Thursday and closed at HK$4.6 ($0.59).
Pan and his co-founder wife, Zhang Xin, worth $4.3 billion on the Forbes Real-Time Billionaires List today, will continue to own 9% of the business after Blackstone’s purchase. The company has no plans to delist, the filing said.
The couple founded SOHO China in 1995 and within four years had created the best-selling property project in Beijing – the SOHO Xiandaicheng (which means Modern City).
Distinctive projects with architect Zaha Hadid, who died in 2016, helped to put the couple on the global real estate map.
Listed in Hong Kong since 2007, SOHO China owns 1.3 million square meters of real estate across the country. At its peak in 2010, the company reached annual sales of 23.8 billion yuan ($3.7 billion) but by 2012 sales had plunged to 9.468 billion yuan ($1.5 billion).
Its market valuation has also been going down since its peak at around HK$60 billion ($7.7 billion). From 2012, the company started to offload its properties in major cities such as Shanghai and Beijing. By 2020, SOHO China only had nine major investment projects in China.
Blackstone, led by American billionaire Stephen Schwarzman, had $196 billion of real estate investments as of March 31.
In other recent China investments, Blackstone last November bought a 70% stake in an urban logistics park in the southern Chinese city of Guangzhou for $1.1 billion from R&F Group, expanding Blackstone’s China logistics portfolio by approximately one-third.
New York-traded shares in Blackstone Group rose by 1.2% on Thursday to close at $98.48.