Caixin
Jun 17, 2021 07:24 AM
BUSINESS & TECH

Blackstone Offers $3.05 Billion for Majority of Soho China

Commuters ride bicycles past commercial buildings at the Soho China Ltd. Wangjing Soho project in Beijing
Commuters ride bicycles past commercial buildings at the Soho China Ltd. Wangjing Soho project in Beijing

(Bloomberg) — Blackstone Group Inc. offered to take over office developer Soho China Ltd. for as much as HK$23.7 billion ($3.05 billion), its biggest bet yet on the real estate market in Asia’s largest economy.

The New York-based private equity giant is offering HK$5 in cash for each Soho share, the Chinese company said Wednesday in a Hong Kong stock exchange filing. The bid represents a 31.6% premium over Soho’s last closing price before trading was suspended pending the announcement.

Soho Chairman Pan Shiyi and Chief Executive Officer Zhang Xin, who own a majority stake in Soho China, have agreed to sell most of their shares to Blackstone, according to the statement. They plan to keep a 9% stake after the deal closes. Blackstone intends to keep Soho listed on the Hong Kong stock exchange, the statement said.

Blackstone has been investing in office, retail and logistics assets in China since 2008 and owns 6 million square meters of properties in the country, according to the statement. The investment business is doubling down on Asia, seeking to raise at least $5 billion for a fund focused on the region, people familiar with the matter said.

Shares of Soho are to resume trading Thursday morning. Goldman Sachs Group Inc. is advising Blackstone on the deal.

Takeover Target

Soho has been seen as a takeover target since early 2020 as a lack of new assets in its pipeline and declining office rents in key Chinese cities put mounting pressure on profits. The Beijing-based developer said in March last year it was in talks on a potential deal with overseas financial investors that could lead to a bid for the company.

Blackstone was in discussions about a deal for Soho, though negotiations stalled amid concerns about financing and the impact of the coronavirus pandemic, Bloomberg News reported at the time. Soho said in August that all previous talks with potential investors were terminated.

Soho China, founded in 1995, holds and operates 1.3 million square meters of commercial properties in China, according to the statement. Its key assets include the signature Bund SOHO in Shanghai and the landmark Wangjing SOHO in Beijing, designed by Zaha Hadid, the first woman to receive the prestigious Pritzker Architecture Prize, according to the company’s website.

Of the two key funds buying Soho’s stake, Blackstone Real Estate Partners Asia II manages about $7 billion and Blackstone Real Estate Partners (Offshore) IX, $20 billion, according to the statement. Blackstone’s real estate arm had about $196 billion of capital under management as of March 31.

The investment company reached a $1.1 billion deal in November to buy control of the biggest urban logistics park in southern China’s Greater Bay Area. In late 2018, Blackstone acquired a Shanghai mall and office complex from Mapletree Investments Pte. for $1.2 billion, people with knowledge of the matter said at the time. It agreed the following year to buy stakes in Chinese shopping centers in Xi’an and Zhengzhou from Taubman Centers Inc.

Contact editor Bob Simison (bobsimison@caixin.com)

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