Chinese real estate tycoon Pan Shiyi is selling his SOHO China unit to US private equity fund Blackstone for $3 billion. According to some commentators, Pan Shiyi’s sale is suspected to be a cash-grab to prepare for his escape, as the Chinese government has been in a “fat duck” mode since Jack Ma’s tragic harvest of private companies. And BlackRock, which has close ties with the Chinese Communist Party, can continue to make money in China.
“SOHO China said Wednesday night that Blackstone Group has offered to buy 4.73 billion shares of the company for HK$23.66 billion ($3.05 billion), or 91 percent of the company’s total share capital, at a price of HK$5 per share; Pan Shiyi and his wife will sell a total of 2.856 billion shares, cashing out 14.3 billion. They will also retain a combined 9% stake in the company, and SOHO China will continue to be listed on the Hong Kong Stock Exchange.
He Jiangbing, a Chinese economist who has dealt with Pan Shiyi, told the station that the current purchase price of $3.05 billion is obviously a significant reduction from last year’s rumored purchase price of $4 billion. But the deal is a timely stopgap for Pan Shiyi, given the difficulties of Chinese real estate in the wake of the New Crown epidemic and the unspeakable political factors.
He Jiangbing said: after the new crown, commercial real estate, discount prices, this is a trend, the more towards the back of the valuation may be lower, the old Pan so sold at a reduced price, from the economic point of view, this is good for both sides, Pan Shiyi he can also cash out successfully, a soft landing well!
According to reports, between 2014 and 2019, Pan Shiyi has been selling his assets for nearly 30 billion yuan. The assets sold include Shanghai SOHO Jing’an Plaza, SOHO Hailun Plaza, Shanghai Hongkou SOHO, etc. After the sale of SOHO China, Pan Shiyi has basically cleared out his assets in China.
Australian commentator Huang Fu Jing said in an interview that Pan Shiyi, a private entrepreneur who built his business on the power of the Chinese Communist Party, is not selling because of the downturn in the real estate economy, but because Xi Jinping’s regime is targeting private entrepreneurs and cutting off their fat ducks.
Pan Shiyi is fearful, and he is ready to leave, Huangfu Jing said. The Chinese Communist Party will not be soft on business tycoons, Ma Yun is a precedent, you will die in minutes! These private entrepreneurs have a great sense of insecurity, mainland China is a “dangerous country can not stay”, they will consider to pack up and sell away, unless completely intertwined with the interests of the Chinese Communist Party, can not get away from the people who can leave or have already emigrated all their homes outside, they will not stay in China.
The deal is the largest real estate investment in China by BlackRock. Huangfu Jing believes that BlackRock is entering Chinese real estate against the trend because, as a representative of Wall Street, which has close ties with the Chinese Communist regime, BlackRock does not have to worry about being cut off in the Chinese market and can even make use of the Chinese Communist Party’s power to reap capital.
Huangfu Jing said: Wall Street’s collusion with the Chinese Communist Party has made Wall Street a big profit. Blackstone’s purchase of SOHO is part of Wall Street’s overall layout for China’s future. The Chinese Communist Party may have made an under-the-table deal with Blackstone, you come and do me a favor, I will give you benefits, I will let you come to China to make money. BlackRock is taking advantage of this opportunity to continue to make a profit, BlackRock is a speculative bet.
In November 2019, it was rumored that “SOHO China” intended to sell eight core assets in a deal with the BlackRock Group, and three months later, it was rumored that BlackRock intended to privatize “SOHO China” at a price of HK$6 per share. Three months later, it was rumored that Blackstone intended to privatize SOHO China at a price of HK$6 per share, with a transaction value of US$4 billion, during which Pan Shiyi was rumored to have left the company.
In April of that year, the English edition of the Global Times, a mouthpiece of the Chinese Communist Party, quoted Stephen A. Schwarzman, co-founder and president of Blackstone, as talking with Chinese investor Shen Nanpeng, saying that Schwarzman praised China for emerging from the post-epidemic slump to become the world’s strongest growth country. BlackRock is also betting heavily on the Chinese market.
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