BRIEF: Blackstone nears deal to become New World Development major shareholder
U.S. private equity giant Blackstone Inc. (BX.US) is nearing a deal that would make it the largest stakeholder in troubled Hong Kong conglomerate New World Development Co. Ltd. (0017.HK), according to a report in Bloomberg. Such a deal would see Blackstone take control of the company from the local Cheng family.
Addressing market speculation, New World clarified in a Thursday statement that it had contacted its controlling shareholder, Chow Tai Fook Enterprises. Its queries revealed that discussions underway with several potential investors, though no definitive agreements concerning the size, nature, or structure of any investment have been reached, it said.
Founded in 1970 by Cheng Yu-tung and listed in 1972, New World Development is currently 45%-owned by the Cheng family. The property developer has grappled with ballooning liabilities following operational difficulties in recent years. The situation led to a management shakeup that saw former heir apparent Adrian Cheng step down from the company. His father, Henry Cheng, resumed control, overseeing an extensive restructuring and asset disposals to pare down the company’s mounting debt.
Desire to pay down the company’s debt load set the stage for seeking external investments. Reports last year indicated that both Blackstone and CapitaLand Group were eyeing select assets within New World’s portfolio. But more recent speculation suggested Blackstone’s involvement could come through a capital injection into New World, potentially alongside money from the Cheng family
Shares of New World Development opened up 5.6% on Friday, but later gave back some of the gains and closed up 2.3% at HK$11.38. The stock has tripled from its 52-week low.
By Lau Chi Hang
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