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On December 12, 2023, the first snow of 2023 fell in Beijing. Snowflakes were flying outside the window, but the negotiations in the office of Wanda headquarters were extremely intense. On one side was the shrewd and powerful PAG Capital team, and on the other side was the Wanda business management team waiting for a price. They were both striving for their own maximum interests.

The negotiation progressed faster than many people imagined. At 2:00 a.m. that day, the negotiation of the last clause was finally finalized. When he came out of Wanda's headquarters office late at night, PAG Investment Partner and PAG China President Huang Dewei saw that the ground was covered with snow and there were no footprints. He thought it was a good sign.

Wanda's senior executives also breathed a sigh of relief. Prior to this, Wang Jianlin not only sold theWanda FilmHe also sold more than ten Wanda Plazas in succession. However, facing the high pressure of a 38 billion yuan listing bet, he could not afford so much at once.

The cooperation with PAG has allowed Wang Jianlin to show his peers how he can turn the tide. Soon, at the end of March this year, PAG, a top PE institution, attracted two major Middle Eastern financial groups, Abu Dhabi Investment Authority (ADIA) and Mubadala Investment Company (Mubadala), to join the partnership.

The two newly joined Middle Eastern consortiums are of considerable background and are both among the top three global sovereign wealth funds. They, together with PAG, CITIC Capital, and Ares Management's fund (Ares), have reached a strategic agreement worth 60 billion yuan, allowing Wanda to obtain the largest private equity investment in China in the past five years.

However, more than three months after the deal was finalized, not only has there been no official announcement on the transaction, but there have been repeated reports that the equity of Dalian Xindameng Commercial Management Co., Ltd. (hereinafter referred to as "Dalian Xindameng") has been frozen.

On the other hand, Dalian Wanda Commercial Management is still "selling, selling, selling". On July 11, 2024, Wang Jianlin sold the Dongguan Houjie Wanda Plaza to Sunshine Life Insurance. This is the third Wanda Plaza sold by Wang within a week.

It seems that this sky-high transaction, which was jointly pursued by Wanda and investors such as PAG, has encountered some difficulties.

The alarm sounded and equity was frozen one after another

On June 28, 2024, all 16.2 billion shares of Dalian Xindameng held by Dalian Wanda Commercial Management were frozen for 3 years, and the execution court was the Zhuhai Intermediate People's Court of Guangdong Province. As soon as this news came out, the fate of Dalian Xindameng became confusing again.

Dalian Xindameng is a new platform established in January this year with a registered capital of 16.207 billion. Currently, all its shares are held by Dalian Commercial Management and its subsidiaries. According to the plan, it will carry 60 billion yuan of "life-saving money" and will be separated from Wanda's original management system. New investors will enter the board of directors and influence the company's decision-making.

It seems that Wanda is about to enter a new stage, and Wang Jianlin can finally relieve himself of the pressure of repaying debts. But what is unexpected is that Dalian Xindamen, once regarded as Noah's Ark, has had its entire equity frozen three times in just half a year, and has been repeatedly caught up in equity disputes.

As early as March 20 this year, Dalian Wanda Commercial Management's 16.2 billion yuan equity in Dalian Xindameng was frozen due to a dispute between Wanda Commercial Management and the bank over an operating loan. However, the transaction was soon unfrozen on March 25. Five days later, the transaction amount of 60 billion yuan of investment funds was officially announced, shocking the entire capital market.

But in May this year, Dalian Wanda Commercial Management's 16.2 billion yuan equity in Suntech was frozen again, and the executing court was the Beijing Fourth Intermediate People's Court, which later lifted the freeze. However, this stable situation did not last long.

At the end of June, the Zhuhai Intermediate People's Court of Guangdong Province once again issued a freezing order for the 16.2 billion yuan of shares, but there is no official detailed reason for this freezing of shares. As of press time, the 16.2 billion yuan of shares are still frozen and have not been unfrozen as quickly as the previous two times.

A closer look at the three consecutive equity freezes shows that they were handled by three different courts, and the causes of the disputes were complicated and not further disclosed. However, the executors behind the three equity freezes were all related to the debts of its parent company, Dalian Wanda Commercial Management.

Dalian Wanda Commercial Management is Wanda Group's asset-heavy business unit and also the main debt issuance platform for the entire Wanda Group. In the past two years, under the continuous debt pressure, the equity dispute of Dalian Wanda Commercial Management has continued to escalate, and has implicated the entire Wanda Group.

At present, more than 90% of Dalian Wanda Commercial Management's shares have been frozen, which has further caused Dalian Xindame, Zhuhai Wanda Commercial Management and other companies it holds to be involved in the vortex of equity freezing. Industrial and commercial data show that Dalian Wanda Commercial Management and its subsidiaries all hold shares in Dalian Xindame, and also hold 70% of Zhuhai Wanda Commercial Management's shares.

The increasing proportion of equity freezes indicates that Wang Jianlin will face a series of troubles: Wanda creditors who cannot get their money will inevitably take active equity freeze actions. However, in order to resist the risk of equity freeze, Wang Jianlin, who has been in the business world for many years, has also reserved a trick for Dalian Wanda Commercial Management.

"Shijie" learned that just one day before the Zhuhai Intermediate People's Court of Guangdong Province took action to freeze the shares, Dalian Wanda Commercial Management and Dalian Wanyu Enterprise, which together held 99% of the shares of Dalian Xindameng, had all of them pledged to the Expo Branch of Shanghai Pudong Development Bank Co., Ltd.

Duan Xuejian, a lawyer at Taihotai (Wuhan) Law Firm who is responsible for corporate mergers and acquisitions, told Shijie: "According to relevant regulations, the establishment of equity pledge rights is subject to registration. If the registration precedes the freezing, it will not affect the establishment and exercise of the pledge rights. Such an action is beneficial to the pledgee, who can then receive priority payment for the proceeds from the equity auction."

At present, "Shijie" has found from the national enterprise information disclosure platform that the above two equity pledges are both valid. However, simply pledging the equity to the bank can only give Wang Jianlin a temporary advantage. Wanda Commercial Management's biggest handle to solve the debt crisis still depends on the timely arrival of the 60 billion yuan "life-saving money".

The strategic investment is progressing slowly and the equity has not yet changed

When announcing the 60 billion transaction cooperation, Huang Dewei revealed in a media interview: "The 60 billion funds will be in place at one time and are expected to be completed in the second quarter. By then, the new board of directors will also be reorganized simultaneously, and the joint investor's 60% shareholding will also be reflected in the proportion of board members."

In order to resolve the gambling crisis, Dalian Wanda Commercial Management and investors such as PAG reached a cooperation model of "exchanging equity for funds". This means that after completing due diligence and determining the equity ratio, investors need to complete fund raising and pass the necessary legal and regulatory reviews before they can obtain the conditions for delivery.

But now, the second quarter of this year has passed, and Dalian Xindami has not only not undergone any equity changes, but also has not announced the list of directors. At present, industrial and commercial data show that Dalian Xindami is still controlled by Dalian Wanda Commercial Management with a 99.9% stake, and its supervisors and executive directors are still Wanda veterans.

At the beginning of the official announcement of the 60 billion cooperation, Wanda introduced that Dalian Xindameng is a newly established holding company, and its subsidiary is Zhuhai Wanda Commercial Management, which is a commercial plaza operation and management platform, currently managing 496 large commercial plazas. However, to this day, there is still no further corresponding division in the industrial and commercial information.

As the equity and management have not been delivered as scheduled, the 60 billion yuan war chest provided by the Middle East consortium has attracted much attention as to when it will be received. A person close to Wanda revealed to "Shijie" that "due to some technical factors, the 60 billion yuan fund is still being pushed forward and has not yet been received." He further stated that "the cooperation with PAG is still ongoing, and there are internal departments that are specifically promoting it, but it is not clear when the funds will be received."

In fact, it is not easy to seek direct or indirect investment from Middle Eastern sovereign funds. According to Shijie, contrary to the intuitive impression of many people that Middle Eastern funds are "rich and powerful", investors in Middle Eastern funds are actually very pragmatic.

Chen Naijia, a researcher at ANBOUND who has deep experience in the Middle East sovereign fund business, told Shijie: "They will ask whether the investment target has mature products and production lines, and whether it is willing to enter the Middle East market. The questions they ask are very meticulous, pay attention to details, and their demands are straightforward without beating around the bush."

According to Chen Naijia, judging from previous industrial investment cases in the Middle East, their investment in China is largely to attract investment, drive China's industrial chain into the Middle East, and promote their own economic transformation. "They will give priority to companies that have mature technology and are willing to enter the Middle East market."

In the past 2023, Middle Eastern sovereign funds showed a strong interest in global real estate investment. However, they are more restrained in China's real estate market, and mainly invest indirectly through private equity funds such as PAG.

"PAG's involvement with Abu Dhabi Investment Authority and Mubadala Investment Company may indicate that some Middle Eastern sovereign funds are interested in investing in Chinese commercial real estate, but this remains to be seen and requires more information to prove it." Chen Naijia said that apart from the cooperation agreement between PAG and Wanda, Middle Eastern sovereign funds have not made any other major moves in real estate investment in China.

Judging from the current situation, as an established PE in Asia and known as “AsiaBlackstone", became the most important "key man". According to public information, after signing the 60 billion agreement, PAG began to actively work hard to raise more funds and attract investors.

Huang Dewei once recalled to the media: "This 60 billion yuan deal was actually formed in less than four months, and all the investment details were not finalized until three days before the cooperation framework was finalized." To some extent, this also follows PAG's strong style in real estate investment.

Lin Xi, an investor who bought bond products under PAG, described PAG's previous investment style as "wild". "PAG invested in a lot of private real estate in the past two years, but the market situation was not good and we were trapped in the end." He revealed that "PAG has become cautious in the past two years and has continued to withdraw from some real estate investments."

However, PAG was confident about the deal with Wanda Commercial Management. Huang Dewei once publicly stated: "At that time (when the contract was signed), we were not sure which investors would join, but PAG was confident in its investment judgment, so we first determined a 60% shareholding ratio."

Recently, there have been reports that PAG's fundraising progress has been slower than expected. At the end of June this year, Bloomberg reported that PAG had completed raising $4 billion in funds, which were mainly invested in China. One of the buyers was the Middle Eastern shareholder of Wanda, the Abu Dhabi Investment Authority (ADIA).

However, the fund's financing progress was not smooth. The original financing target was about US$9 billion, but in fact, PAG only raised less than half of the planned amount. Chen Naijia told Shijie.com: "The international situation and economic environment have changed dramatically in the past two years. American investors, including American pension accounts, have actively avoided real estate investment in Asia, especially China, this year. This is the main reason for the reduction."

However, despite the difficulties, PAG's enthusiasm for investing in China has not completely faded. To this day, PAG is still the most active private equity fund in the Chinese market among similar private equity funds investing in Asian real estate-related businesses. "Among similar private equity funds, it is one of the few companies that still has no upper limit on investment in the Chinese market," said Chen Naijia.

On July 12, market news broke that PAG plans to set up a fund specifically for investment in China, with an estimated size of several hundred million to one billion US dollars, mainly from markets outside North America (mainly Middle Eastern and Asian investors), including investments from China. In the future, whether PAG's fundraising progress in partnership with the Middle Eastern consortium can still meet expectations may further affect Wanda's fate.

The asset-light business moved to Zhuhai and the “selling, selling, selling” continued

At present, Wang Jianlin still needs to find a way to solve the imminent debt problem.

Not long ago, Wanda Commercial Management announced that its light asset business would be relocated to Zhuhai. Zhuhai Commercial Management is Wanda Group's light asset business, registered in Hengqin, but most of its employees work in the Beijing headquarters all year round. But in May this year, a notice about the relocation of Zhuhai Commercial Management employees changed the situation.

"Shijie" learned that many employees of light asset businesses received a notice requiring all 500 employees to return to their registered place of Zhuhai before July 19, and the new office building will be located in the "ICC Hengqin International Business Center".

Internal employee Liu Xiao told Shijie that currently only departments and personnel related to light asset businesses are relocating. "This time it was the Zhuhai Municipal Government that required the relocation. However, the company has subsidies for relocated employees. Each person will receive a 3,000 yuan food and accommodation allowance and 10 days of family leave."

Before the relocation, Zhuhai Wanda Commercial had been "off-site" in the Beijing headquarters building since its establishment on March 23, 2021. The Wanda Beijing headquarters building is the first CBD project settled by Wang Jianlin after he moved the headquarters from Dalian to Beijing, and Wanda has thus embarked on a road of rapid expansion.

Three months ago, Wang Jianlin put his Beijing Wanda headquarters on Dawang Road on the shelf. In April this year, the company to which Beijing Wanda Plaza belongs, Beijing Wanda Plaza Industrial Co., Ltd., underwent industrial and commercial changes, Dalian Commercial Management officially withdrew, and the new buyers became New China Life and CICC Capital.

But selling the Beijing headquarters is just one part of Wanda's "selling, selling, selling". The current financial constraints of the Wanda Group have not improved, and Wanda's "selling, selling, selling" still shows no signs of stopping. Since entering July, three Wanda Plazas, including Dongguan, Yichun and Yantai, have been sold in just the past week.

According to incomplete statistics, Wang Jianlin has sold 24 Wanda Plazas in a row to pay off his debts. In this round of asset transfer, insurance funds played a major role in taking over.Sunshine InsuranceThe largest number of purchases was made by Wanda Commercial Management Co., Ltd., which indirectly acquired several Wanda Commercial Management Co., Ltd. subsidiaries located in Hefei, Taicang, Huzhou, Guangzhou, and Shanghai.Xinhua Insurance, China Life Insurance, Hengqin Life Insurance and other insurance companies have also participated in it.

The reason why insurance funds favor Wanda Asset is that they are optimistic about its stable rental returns and appreciation potential. Liu Xiao told "Shijie": "These sold projects include not only heavy asset projects but also light asset businesses, and generally speaking, the quality of these projects is relatively high."

In fact, according to the original plan, Wang Jianlin and PAG Investments will use "New Wanda Alliance" to get rid of the original debt crisis and restart Wanda Commercial Management. But if the "life-saving money" is not received in time, Wang Jianlin will still have to face the debt repayment pressure of Dalian Wanda Commercial Management.

Public data shows that Dalian Wanda Commercial Management currently has 9 outstanding bonds with a total outstanding amount of 6.902 billion yuan, of which 1.878 billion yuan will mature within one year. In terms of overseas bonds, Wanda Commercial Management currently has 3 outstanding US dollar bonds with a total outstanding balance of 1.24 billion US dollars, of which two US dollar bonds will mature within one year, with a total maturity amount of 940 million US dollars.

This means that Wanda may sell more assets and continue to repay its debts. Not long ago, Wang Jianlin also sold Sunseeker International, the world's top luxury yacht company acquired in 2013. Sunseeker International once carried Wang Jianlin's yacht dream, but now the yacht dream has ended.

Many years ago, Feng Lun, the founder of Vantone Group, once gave Wang Jianlin a nickname: China's most hardworking entrepreneur. But recently, when talking about Wanda Group's asset-light business transformation, this old friend said with emotion: "After 30 years of development, Wanda has returned to the starting point to some extent."

(Liu Xiao and Lin Xi are pseudonyms in this article)

Author |Li Dou

Editor |Sun Chunfang

Operations |Liu Shan