SINGAPORE - The property arm of Keppel Corporation is looking to buy a 30 per cent stake in Win Up Global (WUG) which will ultimately own Westmin Plaza, an office and retail development in Guangzhou, China, for a total investment of HK$141.4 million (S$24.8 million).
Keppel Land China, a wholly owned subsidiary of Keppel Land, has entered into a share sale and shareholder loan transfer agreement (SPA) with Chinese real estate developer Topchain Group, according to Keppel Corp's bourse filing on Tuesday morning.
The remaining 70 per cent stake in WUG will continue to be held by Topchain.
The acquisition is in line with Keppel Land China's strategy to grow its commercial portfolio in China, with a focus on first-tier cities, said Ben Lee, president of Keppel Land China. It also marks the company's maiden entry into Guangzhou.
Westmin Plaza in Guangzhou's Liwan District has a gross floor area (GFA) of 42,533 square metres (sq m) spread across three storeys of retail space and 14 storeys of office space.
The commercial project is a five-minute walk to Ximenkou Station on Metro Line 1. It is also near the office sub-market of Yuexiu District, which houses a cluster of government agencies, research and education institutions, as well as the headquarters of local and international companies.
This is Keppel Land China's first partnership with Topchain, which develops and manages urban renewal projects in the Guangdong-Hong Kong-Macau Greater Bay Area (GBA). Topchain has 16 assets with close to 500,000 sq m in GFA under its management.
"The rejuvenation of Westmin Plaza will allow us to capture growth opportunities in Guangzhou's growing commercial real estate market as the city continues to develop into an international metropolis," Mr Lee said.
The investment totalled about HK$141.4 million in cash consideration and shareholder loans as at Sept 23.
This amount comprises US$1 in cash to buy the 30 per cent of shares in WUG; HK$95.9 million in cash to purchase from Topchain a portion of the current shareholder loan it provided to WUG; and the provision of 30 per cent of a new HK$151.4 million shareholder loan to WUG, or about HK$45.5 million, subject to adjustment after completion of the transaction. Topchain will provide the remaining 70 per cent of the new shareholder loan to WUG.
The transaction is expected to complete by the end of September 2019. It is subject to the satisfaction of conditions precedent, which include the provision of the new shareholder loan.
Keppel Corp said on Tuesday (Sept 24) that the proposed acquisition is not expected to have a material impact on its net tangible assets per share or earnings per share for the current financial year.
Du Jing, chairman of Topchain, said: "We are positive about the market for real estate rejuvenation projects in GBA."
The GBA is one of the three major urban clusters identified by the Chinese government for innovation-driven development. Guangzhou's gross domestic product (GDP) for the first half of 2019 grew 7.1 per cent year on year, surpassing China's GDP growth of 6.3 per cent. The city is positioned as a core regional engine in the national development plan for the GBA released this February.
Shares of Keppel Corp closed at S$6.04 on Monday, down four cents or 0.66 per cent.
