China's Vanke in talks to sell logistics firm stake to GIC, source says

Onewo

23/01/2025 09:59

By Yantoultra Ngui
       SINGAPORE, Jan 23 (Reuters) - Indebted property
developer China Vanke Co Ltd  000002.SZ  is in advanced talks to
sell a controlling stake in VX Logistics to Singaporean
sovereign wealth fund GIC, a person with knowledge of the matter
said.
    The financial details of the potential transaction were not
immediately known. Vanke and GIC declined to comment.       
    State-backed Vanke has been trying to sell a number of
assets, including its stakes in cold chain logistics firm VX,
logistics platform GLP and property management unit Onewo
 2602.HK , to ease liquidity pressure, sources said last week. 
    The VX Logistics stake sale, if finalised, would come amid
growing concerns about Vanke's financial health, as the firm
becomes the latest victim of China's protracted property sector
debt crisis.
    Vanke's next yuan-denominated bond repayment deadline is
Jan. 27, with a total $3.4 billion due this year.
    The state-run Economic Observer reported last Thursday that
Vanke's CEO had been detained and the developer could be subject
to a takeover or reorganisation. The report was deleted within
hours of its publication.
    A deal for the VX Logistics stake sale to GIC could be
finalised as soon as next month, said the source, who could not
be named as the information was private.
    The Shenzhen-based developer's 81.6% stake in VX Logistics
was worth about 27 billion yuan ($3.7 billion) in 2022,
according to corporate registry records that then valued the
whole company at $4.5 billion.    
        Vanke raised a 20 billion yuan syndicated loan facility
in May 2024 by pledging shares in VX Logistics, a source said at
the time.
    Financial news outlet REDD first reported on Wednesday about
the advance talks between Vanke and GIC. 
        VX Logistics posted revenue of 1.94 billion yuan
($266.24 million) in the first half of 2024, according to
Vanke's interim report.
    The government in the southern city of Shenzhen, where Vanke
has its headquarters, is stepping up meetings and coordination
with local state enterprises on plans to contain the company's
debt risk and on asset disposals, Reuters reported on Tuesday.
    Some analysts say a debt default is inevitable this year
without fresh liquidity support, as Vanke's monthly sales plunge
below break-even levels and it encounters difficulties in
borrowing from banks and disposing assets.
    ($1 = 7.2805 Chinese yuan renminbi)

 (Reporting by Yantoultra Ngui in Singapore; additional
reporting by Kane Wu and Clare Jim in Hong Kong and Engen Tham
and Li Gu in Shanghai; Editing by Sumeet Chatterjee and Kate
Mayberry)
 ((kane.wu@thomsonreuters.com; +85228436590; Reuters Messaging:
kane.wu.thomsonreuters.com@reuters.net))