Foreign investors are vying for a stake in Beijing Wangfujing
Department Store (Group) Co Ltd, China's top Shanghai-listed
retailer with 15 department stores across the country.
Warburg Pincus, Carlyle Group and Goldman Sachs are among the
more than 20 foreign investors that have been seeking a stake in
Wangfujing since the first half of 2006.
"The plan to sell part of Wangfujing's shares to foreigners was
decided as early as last May, but as for detailed execution of the
plan, nearly no one knows at present," a financial adviser to
Beijing's retail sector restructuring, who declined to be named
told China Daily yesterday.
According to the latest development, foreigners may acquire only
25 percent of Wangfujing's total 393 million shares from its
largest shareholder Beijing Beikong Commercial Investment Co
Ltd.
But the financial adviser said, "foreign investors could buy a
stake in Wangfujing of as high as 49 percent" in May last year.
At that time, the Beijing municipal government aimed to maintain
its controlling stake in Wangfujing through its wholly owned
company Beijing Beikong, which holds 197 million Wangfujing shares,
accounting for 50.13 percent of the total.
"Most foreign investors wanted to gain control of Wangfujing
through buying its shares, but the Beijing municipal government
refused to lose control," said the source.
Carlyle reportedly sought a 60 percent stake in Wangfujing, but
was rejected by the local State-owned Assets Supervision and
Administration Commission (SASAC).
According to the source, Carlyle's merger and acquisition group
has taken charge of negotiating with Beijing's SASAC while Warburg
Pincus has already held several talks with Wangfujing. Goldman
Sachs dropped out of the running six months ago.
News of the foreign purchase of Wangfujing stakes, together with
the completion of its share reform last December, pushed up its
share price from 10 yuan last May to the current 27 yuan, jumping
some170 percent.
"Wangfujing's share price has continued to soar in the past
year, which led some investors to suspect that 27 yuan is a bit
higher than its deserved value based on analysis of its corporate
fundamentals," said Chen Chen, a retail stock analyst at CITIC
Securities.
(China Daily January 26, 2007)