(Yicai Global) Nov.19 -- Less than a month after completing its Hong Kong initial public offering, property manager KWG Living Group Holdings is looking to acquire the real estate management business of Cedar Holdings despite the latter’s much larger scale, a person familiar with the deal told Yicai Global.
Large investment firm Cedar put its property management business up for sale two months ago, the person said. Whether KWG Living will take over all of the 900 million square meters Cedar looks after is unclear.
KWG Living, a spin-off from realty company KWG Group Holdings, went public in Hong Kong on Oct. 30, raising HKD3 billion (USD387 million) through the sale of 383 million shares.
Public records show that as of April 30, KWG Living managed 109 residential properties with a gross floor area and contracted GFA of 18.9 million sqm. and 29.7 million sqm., respectively.
Cedar is a private company set up in Guangzhou 1997 that focuses on fields such as commodity resources and supply chain services and has branched out into industrial investment and comprehensive supporting services. It ranked No. 296 on the Fortune Global 500 list this year, with operating revenue of CNY285.1 billion (USD43.3 billion). The firm’s property supervision business is several times the size of KWG Living.
Cedar Smart Connection Technology Group, Cedar’s urban management services unit, serves over 1,300 self-run projects and almost 8,000 partnership projects across China, totaling an area of almost 900 million sqm., according to its official WeChat account.
The 900 million sqm. figure is “unbelievable,” according to a person in charge of a leading property management firm. Even the property management divisions of real estate giants like China Vanke and Country Garden only look after 300 million-plus sqm., he added.
But at the end of 2018, Shen Jianzhong, president of China Property Management Institute, said that Cedar’s property management entity was one of the first in China to integrate the industry through mergers and acquisitions and that it managed over 120 million sqm.
It is not yet clear how KWG Living will acquire Cedar’s property business, but KWG Living would quickly join the ranks of the nation’s property management giants if the transaction proceeds.
Shares of KWG Living [HKG: 3913] rose 5.1 percent today to close at HKD5.97 (8 US cents) apiece.
Editors: Liao Shumin, Peter Thomas