On the evening of February 21, Chinese real estate giant Vanke announced that its largest shareholder, Shenzhen Metro Group Co., Ltd. (“Shenzhen Metro Group”), intends to provide a loan of 4.2 billion yuan to Vanke for repaying upcoming debts. Since last year, Shenzhen Metro Group has supported Vanke with an investment of approximately 11.5 billion yuan, but has not yet recovered the investment costs from Vanke.
According to Vanke’s announcement, the pricing of this loan is based on the one-year loan market quotation interest rate (LPR) announced by the National Interbank Funding Center one working day before the withdrawal date for each loan, minus 76 basis points, currently at 2.34%.
Regarding the credit enhancement arrangements for this loan, initially three wholly-owned subsidiaries of Vanke are providing guarantees. Within the next three months, Vanke will need to provide assets worth up to 6 billion yuan for mortgage or pledge after obtaining approval from the shareholders’ meeting, with a mortgage/pledge ratio set at 70%, while simultaneously lifting the guarantees provided by the aforementioned three subsidiaries of Vanke.
According to reports from mainland media, since 2024, Shenzhen Metro Group, a major shareholder of Vanke, has continuously supported Vanke Group through block trades, REITs subscriptions, shareholder loans, and other means. With this 4.2 billion yuan loan, Shenzhen Metro Group has spent about 11.5 billion yuan supporting Vanke since last year.
This year is a significant year for Vanke Group’s public debt repayment. According to Wind data, Vanke currently has a total of 32 outstanding domestic and foreign bonds with a total value exceeding 50 billion yuan, including 16 bonds worth 30.15 billion yuan due for repayment or exercise in 2025.
Public information shows that Shenzhen Metro Group is a state-owned sole proprietorship enterprise in Shenzhen, engaged in construction, operation, development, and comprehensive utilization of metro and light rail transportation projects, responsible for over 90% of urban rail transportation construction and operation in Shenzhen.
In the “Baonan dispute” in 2017, Shenzhen Metro Group acted as a white knight and acquired Vanke’s shares for 66.4 billion yuan from companies such as China Resources and Evergrande, becoming Vanke Group’s largest shareholder. Currently, Shenzhen Metro Group holds 27.18% of the company’s shares, and from the perspective of dividends and stock prices, it has not yet recovered its investment costs from Vanke Group.
Looking at Shenzhen Metro Group’s own operation situation, with the downturn of the Chinese real estate industry starting in 2021, the net profit of Shenzhen Metro Group, which has real estate development business, has also experienced a significant decline.