Will New WMP Regulations Kill Baoneng's Vanke Takeover Attempt?

Baoneng is raising money from WMPs for its takeover attempt (WMPs Funding Vanke Takeover Battle), but new regulations could kill the strategy. (WMPs May Be Banned From Stock Market)

QQ: 理财监管新规出台 宝能系还有“弹药”么？

Shenzhen huge Shenghua Company Limited (hereinafter referred to as huge Shenghua), and continues to increase holdings of Vanke (000002.SZ) share the money come from? Bank financial capital is an important "golden master", it reported that Zhejiang Bank has provided funding for a huge treasure energy system, and a considerable part of these funds which could be used to acquire shares of Vanke, but in financial CBRC promulgated new regulations draft after Boland Department financing capacity may be limited.

...Zhejiang Bank official to CBN reporter, said that the new regulations on banking financial services introduced, with the cooperation of China Zheshang Bank Po Energy will have an impact, the bank is currently studying with in-house experts, the case needs also we continue to understand.

China File: New Territory For Financial Oversight Reform

Vanke management put more pressure on Baoneng July 19 by asking the stock exchange and the China Securities Regulatory Commission (C.S.R.C.) to investigate the stakeholder’s insurance subsidiary Shenzhen Jushenghua Co. for allegedly breaking securities laws and failing to meet information disclosure requirements.

The bitter controversy has focused on Baoneng’s funding arrangement. Many want to know exactly where the money has been coming from, but so far neither Baoneng nor government regulators have straightforwardly revealed Baoneng’s funding course.

Baoneng apparently used a complex financing mechanism that included high-interest-rate borrowing. Knowledgeable sources told Caixin that separate investigations by the C.S.R.C., China Banking Regulatory Commission (C.B.R.C.) and China Insurance Regulatory Commission (C.I.R.C.) found no irregularities tied to Baoneng’s means of fundraising. But market players and analysts have expressed skepticism.

Baoneng Average Price for Vanke: 14.75 Yuan Per Share

iFeng: 万科，你算错了！宝能平仓线：14.75元！

WMPs Funding Vanke Takeover Battle

Bloomberg: Vanke Share Slide May Spur Liquidity Squeeze at Baoneng Fund

Baoneng has used about 43 billion yuan ($6.4 billion) to purchase Vanke shares in the secondary market, JPMorgan analysts led by Katherine Lei wrote in a July 12 note. About 26 billion yuan was lent by six banks through asset-management plans, or AMPs, a type of shadow-banking arrangement that is used for stock purchase in China, according to the note. Banks including China Construction Bank Corp., China Minsheng Banking Corp. and China Zheshang Bank Co. participated in the financing, according to a China Business News report on July 8.

...According to industry practice, if a stock’s drop hits a stop-loss level leading to a 20 percent decline in the fund’s net asset value, Baoneng would need to inject more cash into it, otherwise senior investors such as the banks can liquidate the fund to limit their losses, according to JPMorgan analysts.

Vanke shares were trading at 14 yuan back in November 2015 before the takeover attempt began, were halted above 24 yuan per share in December 2015, and fell to 22 yuan when trading resumed on July 4, now trading at 17.11 yuan per share (The Shenzhen listed 000002).

Battle for Vanke Heats Up

Reuters: Vanke says business under pressure after Baoneng move to oust board

A plan by China Vanke's largest shareholder bloc to oust the property developer's board has led banks to reconsider how they rate the company's credit, Vanke President Yu Liang told a shareholders' meeting on Monday.

Financial conglomerate Baoneng, which built up a big stake in Vanke last year, is now seeking to oust founder and chairman, Wang Shi and the rest of the board, and has called for an extraordinary general meeting, Vanke said in a statement late on Sunday.

WSJ: Heat Rises on China Vanke

Earlier this month, Vanke said it would issue new shares in an asset-swap deal that would make subway operator Shenzhen Metro Group its largest shareholder. Shenzhen is a metropolis in southern China.

The deal, which will be dilutive, will give Shenzhen Metro a 20.65% stake of the enlarged share capital and will displace Baoneng as Vanke’s largest shareholder. In exchange for the issued shares, Vanke would get land atop metro stations.

Baoneng, according to the exchange filing, is seeking to undermine Vanke’s strategy, which is widely seen as a poison pill. Companies threatened with unwelcome takeover offers often use tactics to make themselves unattractive to bidders.

Baoneng became Vanke’s top shareholder after buying a 24.29% stake through its subsidiaries, bypassing the previous incumbent, China Resources Group. China Resources also opposes the Shenzhen Metro asset-swap deal.

FT: China Vanke boardroom feud boils over

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Both the insult and the prospect of an unprecedented battle for control over one of China’s best-known companies captivated the country’s media. Adding to the drama was Mr Wang’s reputation as one of the country’s most admired and colourful entrepreneurs.

Mr Wang, also a mountaineer and adventurer, built Vanke into a successful developer but never sought to consolidate control over the company, trusting its largest shareholders to not interfere in management.
Trading in Vanke’s Shenzhen-listed shares has been suspended since December 18 pending a restructuring. Both Vanke and Baoneng are based in Shenzhen, the special economic zone bordering Hong Kong.

Shares are still trading in Hong Kong and have formed a head-and-shoulders pattern. If it completes, the downside target is HK$9 and change, a 42 percent decline.

Risky Takeover Financing Comes to China

Caixin: Vanke's New Investor Got Funds in Way Analysts Say Is Risky

Most of the capital that Baoneng Group has used and plans to use to take control of China's largest property developer came from bank wealth management products funneled through a complex and highly leveraged arrangement that analysts say is risky.

Once the credit cycle reboots, there will be a lot of money flowing into equities.