Dalian Wanda Rides China's Financial Merry-Go-Round with Latest Deal

Dianna Christensen
July 12, 2017

Sunac China Holdings's planned $9.3 billion deal to buy Dalian Wanda's tourism projects and hotels is a bargain even though it could become China's most indebted developer, analysts said, a view that sent Sunac shares up almost 14 percent on Tuesday.

Wanda founder Wang Jianlin, one of China's richest businesspeople, said previous year he wanted to challenge Disney as a global theme park brand.

The Malaysian Insight understands that Najib and interested parties were pushing to sign a US$9 billion deal with Wanda but senior Chinese government officials did not show any enthusiasm as they were more comfortable with a state-owned enterprise leading the development in Bandar Malaysia.

Wanda is headed by Wang Jianlin, whose $31 billion net worth makes him China's wealthiest citizen and the world's 18th-wealthiest person, according to Forbes.

The billionaire owner spent his youth in the military and dabbled in local politics before venturing into business.

The CBRC had expressed concerns about the level of debt taken on by some of China's biggest groups, against a background of skyrocketing debt at corporate level. The Wanda Group has other businesses, such as financial services.

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Wang told Caixin that Wanda would accelerate a push to increase its focus on film, sports, tourism, internet, finance and other business, at the expense of property development. "The deal will give Sunac access to land across tier-one to tier-four cities in one go".

Wanda's expansion was aided by Beijing's encouragement of firms to invest overseas to find new markets, access technology and increase China Inc's influence.

Wanda admitted last month that China's banking regulator was looking into potentially risky loans it held. "The proceeds from the sale will be used to pay off loans".

S&P downgraded Wanda Commercial in December citing rising financial leverage and slower-than-expected asset disposal at China's largest commercial developer.

Wanda has been among the most active private Chinese companies investing overseas.

Sunac's shares surged 13.65 percent, their biggest one-day gain in more than two-and-a-half years, on Tuesday.

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