New prince in Wanda land? A dealmaker stakes claim in court of China's richest man

Mon Jun 6, 2016 7:21pm EDT
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By Clare Jim and Elzio Barreto

HONG KONG (Reuters) - A year after he took the reins at a key Dalian Wanda investment arm, Lu Xiaoma's future in the halls of the Chinese property to entertainment empire will be sealed by a bold arbitrage play.

Lu is the chief architect of a $4.4 billion plan adopted by Wanda's billionaire owner, Wang Jianlin, to take his flagship Hong Kong-listed property arm private, according to two people with knowledge of the matter. The goal is to then relist in mainland China, where developers trade at prices three times higher than their Hong Kong peers.

If shares rise once relisted in China, Lu, the little-known Chief Executive Officer of Wanda Investment Co, will have offered Wang, already China's richest man, and the investors who agreed to fund the deal a chunky profit.

But if the delisting plan fails, the former Shenzhen bourse executive's connections from U.S. investment banks to Chinese business leaders won't prevent his prospects from dimming at a group that has set the tone for China Inc expansion: Dalian Wanda has spent nearly $14 billion on buying foreign and Chinese assets in the last two years alone, Thomson Reuters data showed.

"At Wanda, an executive is usually given two years to deliver results, otherwise he will be sidelined," said a person who has worked closely with Wang, 61, whose fortune is estimated by Forbes magazine at $34 billion. "New leaders need to deliver performance; this includes internal restructuring," he said.

The people with knowledge of the situation declined to be identified because the matter was confidential. Lu declined to comment, as did other Dalian Wanda officials.

The bid to take Dalian Wanda Commercial Properties 3699.HK private caught many investors by surprise - it was first announced in March, just 15 months after the firm listed in Hong Kong. Wang and Wanda managers have said they grew disappointed with the shares trading below their list price for months.

Wanda Commercial is currently worth about $29 billion by market value, but most of those shares are not publicly traded. For the stock that does float, Wanda is offering investors a 10 percent premium to Wanda Commercial's IPO price in a buyout offer worth $4.4 billion.   Continued...

Dalian Wanda Group's Wanda Plaza building is pictured  in Beijing, China, May 17, 2016. REUTERS/Kim Kyung-Hoon/File Photo