Blackstone has agreed to buy property developer Soho China for about $3bn, marking the US private equity group’s biggest bet so far on a Chinese real estate market now recovering from the pandemic.
The buyout firm has offered HK$5 a share for a majority stake in Hong Kong-listed Soho China, whose developments are focused on Beijing and Shanghai. The developer commissioned the late architect Zaha Hadid to design its high-end office development in Beijing.
The offer has been accepted by Pan Shiyi and Zhang Xin, the husband and wife team who founded the company and are its chair and chief executive respectively, the developer said in a stock exchange filing late on Wednesday.
The pair hold about 64 per cent of Soho China’s shares, and will retain a 9 per cent stake as part of the deal.
One of the world’s largest property investors, Blackstone has in recent years ploughed money into Chinese offices and residential property, as well as warehouses used in ecommerce.
In January, the firm announced the $1.1bn acquisition of a vast urban logistics park in the so-called Greater Bay area, close to Guangzhou on the country’s south coast. The deal expanded Blackstone’s Chinese warehouse footprint by a third.
“We’re confident in China’s long-term potential and economic recovery, which is well under way particularly in the Beijing and Shanghai office markets,” Justin Wai, Blackstone’s managing director of real estate in Hong Kong, said in a statement.
Shares in Soho China were trading at less than HK$3 earlier in June, but surged almost 50 per cent last week on speculation of a takeover. The offer is a 32 per cent premium to Soho China’s closing share price on Friday.
Nonetheless, it represents a significant discount on Soho China’s net asset value of HK$8.37 a share — a figure the company reported at the end of last year.
Blackstone reportedly made an approach for Soho China last year valuing the company at about $4bn, but the mooted deal was pulled as China battled the pandemic.
With reporting by Thomas Hale in Hong Kong