China’s biggest developer may spin off its property management business

The unit is the company’s second-biggest revenue generator
April 11, 2019 09:30AM

China Vanke CEO Zhu Jiusheng (Credit: Twitter and iStock)

China Vanke CEO Zhu Jiusheng (Credit: Twitter and iStock)

China Vanke, the country’s biggest developer by market capitalization, is considering an IPO.

The company is weighing a Hong Kong listing of its property management business, Bloomberg reported. The firm has spoken with advisers about a share sale that could raise as much as $1 billion. The offering could happen next year.

Vanke would join other Chinese developers — including Country Garden Holdings — in spinning off their management units. That business tends to face less fluctuations from policy changes and economic cycles. Country Garden Services Holdings Co. was listed by introduction last year, while China Aoyuan Group’s services arm raised $94 million in a Hong Kong IPO last month.

Talks are still in early stages, the report said. And the timeline and amount of fundraising could change. A representative for the property management unit told Bloomberg they have no current plans for a listing.

Property management and related services were China Vanke’s second-largest revenue generator. The business contributed 9.8 billion yuan ($1.5 billion), or about 3.3 percent of the developer’s total revenue last year, according to its annual report.

MSCI China Real Estate Index has risen 32 percent this year as the country’s property market begins to recover. Home sales surged in March. China Vanke’s Hong Kong-listed shares have climbed 26 percent since the beginning of the year.

Last year, China Vanke took a 5 percent stake in Cushman & Wakefield ahead of its IPO. Cushman agreed to sell 10.2 million shares in the company through a private placement deal to a unit of China Vanke. [Bloomberg] — Meenal Vamburkar