The Real Estate Business， "Dual―platform" Strategy

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　　Abstract the estate businesses in the real leading position， most have achieved or are achieving A + H shares cross-listed in "dual-platform" strategy. In this paper， Greenland Group， for example， taking the case that it achieved listing in Hong Kong by holding SPG Land as well as the case of achieving listing in Shanghai Stock Exchange by borrowing Jinfeng Investment as the analysis object，we analyze how the real estate businesses builds the A + H shares"dual-platform" strategy and achieve "double platform" model strategy.
　　Key words real estate business backdoor listing dual-platform motivation
　　I. Introduction
　　In recent years， the real estate industry's strategic model has a major change， the major real estate giant companies are listed in Hong Kong. In 2011，Gemdale through its wholly-owned subsidiary Brilliant Business Co.， Ltd. invested 836 million Hong Kong dollars， to buy 61.96% stock right of HK Cheung Investment Company held by Billion Up Limited ， added H-share financing platform for the Group. January 18， 2013 Vanke announced the "B switch H" transfer scheme， proposed that its domestically listed foreign shares （B shares）would transfer listing location， listed and traded on the Stock Exchange main board in Hong Kong by a way to introduce listing， and changed it to Hong Kong-listed foreign shares （H shares）in the Hong Kong Stock Exchange for the listing. April 24， 2013， a wholly owned subsidiary of China Merchants Property Eureka Investment Co.， Ltd. and a subsidiary of Tonic Industries Holdings Limited signed an agreement that Eureka Investment Co.， Ltd. intends to transfer Huiju Limited 100% equity and related claims，Huamin Investment Limited 100% equity and related claims， Lok Fu Investment Limited 100% equity and related debt ， Huipeng Real Estate Development Limited 50% equity and related debt， including the above-mentioned target company and some of its holding companies to Tonic Industries.
　　This series of moves of the real estate tycoons who are pregnant with a new strategic mode of "dual platform" strategy. In simple terms， the "dual platform" strategy refers to the Real Estate Company are cross listed in China and the Hongkong stock exchange to realize the strategy of A+H shares two listed platform. Today， the "double platform" strategy mode has become the mainstream mode of real estate industry. This strategy not only broaden the financing channels of real estate enterprises， and also promotes the internationalization process of the real estate business .In order to analyze the cause of implementing the "dual platform" strategy of real estate enterprises，this paper will aim the perspective at the case of backdoor listing of Greenland Group， then analyzes the two backdoor listing behavior. 　　II the Green Group "double platform" listing
　　（1） Green Group backdoor SPG land listed in Hong Kong
　　1 Recombinant background. Greenland Group was founded in July 18， 1992， mainly engaged in real estate development business， and develop pillar industry such as energy，financial . In 2012， Green Group throughout the year achieved the main business income of 243 billion yuan， an increase of nearly 39% over the previous year. Among them， the real estate business sale amount was more than 105 billion yuan， and the pre-sale area was about 1.18 million square meters， respectively ranked second and third in the national industry. In 2012， Green Group add the land reserve of 10557 acres， building area of 19.8 million square meters； the project in the construction area was more than 52 million square meters， and has been all over the country 25 provinces 70 City， and Jeju Island in South Korea started construction.
　　SPG land was listed in Hongkong in 2006， and mainly engaged in real estate development and hotel management. In the second half of 2012， in order to ease the financial pressure， SPG land started the asset sale plan. In 2012 June， SPG land sold a 263000 square meters of the project in Wuxi to Hengda Real Estate with the price of 965 million yuan； then in November， 30% rights of wholly owned subsidiary Shanghai Zhongxin assets was sold to Shanghai China Building with the price 95 million yuan； then in the beginning of 2013， and then60% of the shares indirectly held by Wuxi Xindu real estate development company was transferred to the Wuxi Taihu Metro Development Group with 1.09 billion Yuan prices . At the same time，the debt rate of SPG land has been high， in 2011 June the company's debt ratio reached 107%， to the end of 2012 the company's liabilities rate reached 81.3%.
　　2 Acquisition by agreement. In the evening of May 8， 2013， SPG land and Greenland Group announced that Greenland Group will to approximately HK $3 billion price， through its wholly owned subsidiary registered in Hongkong （glycopyrronium Xima International Limited），subscribe Sheng Gao Zengfa's ordinary shares and non voting convertible preferred stock.
　　When the transaction is completed， the Green Group will hold the 60% share of SPG’s expanding equity ， to realize the ultimate holding. At the same time， SPG land also will be renamed "green Hongkong Holdings limited".
　　3 Recombinant analysis. Before being bought， SPG land sales lost， bore huge debt pressure， capital chain ruptured， financing channels was blocked. As large enterprises in development， the Greenland Group needs a listed platform as the diversified financing channel. Green Group choose backdoor SPG land listed in Hongkong， then can get through the capital market channel in Hongkong. At the same time， because the domestic real estate financing environment continues to worsen， the financing channel is not smooth， being listed in Hongkong on the one hand the financing cost is relatively low，which also can guarantee the smooth financing channel； on the other hand also as a springboard of overseas investment， dig the domestic business market， and expand overseas business market. 　　（2） the Green Group of backdoor listing Jinfeng Investment
　　1 Recombinant background. In December 17， 2013， Shanghai City， deepening the reform of state-owned assets to promote enterprise development work conference formally announced the "on the further deepening of the reform of Shanghai state owned assets supervision and administration to promote enterprise development views" （i.e. "Shanghai state-owned enterprises reform 20"）， emphasizes the overall listing of the conditional state-owned enterprises， and promotes the further development of large state-owned enterprises into the main representative of the mixed ownership economy， making state-owned capital overall efficiency optimization. The release of this reform suggestions pave the way for later backdoor listing of Greenland Group.
　　At the same time， Jinfeng Investment business situation are under some influence of the macro-control of the real estate development，which needs transformation development to seek new business and profit growth point， to deal with changes in the macroeconomic environment and industry development. Before the reorganization， as of September 30， 2013 the operating revenues of Jinfeng investment was 212763500 yuan， 21.73% year-on-year drop.
　　Compared to Jinfeng Investment， in 2013 Greenland Groups the real estate industry pre-sale area was 16600000 square meters， ranking first in the industry； sale amount is 162.5 billion， ranking second in the industry. the green energy industry development of the Group is very rapid，has coal production， processing， storage， distribution， oil storage， transportation， trade， retail and other kinds of resources the total reserves of 700 million tons， and has annual output of over 1.35 million tons. At the same time， Greenland Group has more than 60 the hotels that is in the construction， and possesses the scale of the assets of over 20 billion yuan.
　　Through this restructuring transactions， Jinfeng Investment will have 100% stake of the world 500 strong enterprises Greenland Group， in transition for the leading enterprises in the domestic real estate industry， and also have the real estate extended industry and energy， automobile， extending financial diversified business as auxiliary support，then forms into large-scale comprehensive industrial group， which will greatly enhance the Jinfeng Investment assets quality， greatly increase the company's profitability and the ability of sustainable development.
　　2. Backdoor listing.In June 26， 2014，Jinfeng Investment said that it received the Shanghai state owned assets supervision and Administration Commission "on the Shanghai Jinfeng Investment Limited by Share， a major reorganization of assets related to the reply"， agreed in principle to the major asset restructuring program. This means that the backdoor listing of Greenland Group go further. 　　Based on the restructuring plan announced in March 2014， assets replacement and the purchase of assets through issuing shares implement synchronously. Replacement of assets refers to Jinfeng planning to exchange all assets and liabilities as well as the Greenland Group's 100% stake with matching value stake held by Shanghai Real Estate Group .
　　After buying he assets， Jinfeng Investment plans to all shareholders of the Greenland Group， including Shanghai City Investment Company， the Shanghai Real Estate Group， China Star Group， Shanghai Greenland， Tianchen Company， Ping An Innovation Capital， Ding Hui Jia Xi， Ningbo Huisheng Juzhi， Zhuhai Pro， SDIC Cooperation Issued Shares， purchase theirs holdings of the Green Group equity， the equity that buys from Shanghai Real Estate Group equity is the rest of their holding Green Group of equity after the replacement of assets. The forecast， assets to be injected into the Greenland Group is estimated at the value of 65.5 billion yuan.
　　3 Control situation after the completion of the transaction. After the completion of the reorganization transaction， the shareholding ratio of Shanghai Real Estate Group and its wholly-owned subsidiary China Star Group， Shanghai City Investment Corporation， Shanghai Greenland is close， and not more than 30%， not any shareholder of the shareholders can separately formed control to listing Corporation. Upon completion of this transaction， the listing Corporation will become diversified Shanghai City stated-owned assets mixed ownership enterprise. Control structure after the reorganization as shown specifically in fig.
　　（3） "dual platform" strategic framework basically formed
　　Greenland Group first backdoor SPG land was listed in Hongkong，then set up H shares the financing platform， and can take advantage of lower cost to obtain capital funds. Subsequently， by the use of state owned enterprise reform policy support， Green Groups backdoor Jinfeng investment was listed on the Shanghai stock exchange， through the domestic capital market channel. Why green group and domestic large enterprises choose the A+H shares the "dual platform" strategy mode， the strategic mode in addition to ensure the diversification of financing channels outside， still have what advantage？ It will make a concrete analysis of it.
　　III the strategic thinking of real estate enterprises implementing"dual platform"
　　（1） Real estate enterprises build the "dual platform" mode 　　According to the different ways to enter the real estate industry， the real estate listing Corporation can be divided into four kinds， respectively is IPO listed， investment transformation， internal development and backdoor listing.
　　Real Estate Company IPO listing refers to the non listed Real Estate Company formed by IPO real estate listing Corporation. Investment transformation means that the listing Corporation do large-scale investment in real estate industry in the outside of the traditional main business， thus forming a new business structure， generally by the sharing or holding way， with partners getting involved in the real estate industry， and gradually become the main business， the company realize cross industry transformation.Internal development means that while the listing Corporation develops the main business ， purposefully cultivates real estate projects in other industries， after a period of development， then real estate projects gradually grow into new business. unlike investment type enterprises，this kind of company has specific goal and direction accurately on industrial adjustment， which can have plan and purpose to carry out industrial transformation. Compared to the other three models， the backdoor listing is the important and common means of the real estate enterprises listing . As of December 31， 2011，A shares Real Estate Company that was listed in the Shanghai Stock Exchange and the Shenzhen Stock Exchange had a total of 138， of which there are 60 using the backdoor listing way.
　　Through the research founded that the backdoor listing mode of the real estate enterprises can be divided into three types： the first type is the restructuring on ST company ， through "the reorganization of assets + additional" backdoor ST companies listed ； the second type is to use the listing Corporation refinancing opportunities backdoor， mainly use the Real Estate Company to subscribe the listing Corporation directional additional stock；the third type is purely backdoor， namely realize the backdoor through purchasing listing Corporation holding right and inject the real estate assets.
　　Large real estate enterprises are mostly through backdoor listing listed on the Hongkong stock exchange and the Shenzhen and Shanghai Stock Exchange， thereout， we built the A+H shares the "dual platform" strategy mode. However， with the backdoor listing exposes more and more problems in practice， such as the backdoor escape public approval， enterprise faces with resource integration and other issues after backdoor， so the SFC gradually improve the threshold of the backdoor listing enterprises. In 2011 August， the SFC proposed backdoor listing and IPO standard converged in the revision of the "management approach to a major reorganization of assets of the listing Corporation " ； in November 30， 2013， the Commission clearly put forward again the backdoor listing and IPO standards ware equivalent in "notice on the strict implementation of IPO listing standards in the backdoor listing audit process " ， and does not allow the backdoor listing in the GEM . The series of measures of the commission show that in the long term backdoor listing will be left out in the market， at the same time，the domestic real estate enterprises in the future will lose an important way of listing， but the real estate enterprise can achieve the backdoor listing in Hongkong market. 　　Large real estate enterprises are mostly through backdoor listing are listed on the Hongkong stock exchange and the Shenzhen and Shanghai Stock Exchange， we built the A+H shares of the "dual platform" strategy mode. However， with the backdoor listing exposed more and more problems in practice， such as backdoor listing approval， after escaping backdoor enterprises are facing resource integration and other issues， the SFC and gradually improve the enterprises backdoor listing threshold. In 2011 August， the SFC in the revision of the "listing Corporation a major reorganization of assets management approach" proposed backdoor listing and IPO standard convergence； in November 30， 2013， the Commission also in "on the strict implementation of IPO listing standards in the backdoor listing audit notice" clearly put forward the backdoor listing and IPO standards equivalent to， and does not allow the listing in the gem backdoor. The commission that a series of measures， shows that the long term backdoor listing will be left out in the cold market， at the same time， the future of real estate enterprises in China will lose an important way of listing， but the real estate enterprise can achieve the backdoor listing in Hongkong market.
　　（2） the real estate enterprises to build "dual-platform" Motivation
　　1. Capital sources. In China， the domestic capital market is not perfect， IPO closing experienced eight times and the cumulative pause time has four and a half time， which is difficult to meet the large-scale long-term financing needs of the real estate business. Hong Kong and foreign capital markets are relatively perfect， but the capital market environment is unpredictable， so it is difficult to ensure the smooth flow of financing. Therefore， in order to avoid the risk of the domestic and foreign listed financing channels，the large real estate enterprises choose to build A + H shares "dual-platform" financing model to ensure the smooth flow of business development financing channel.
　　On the one hand，"dual-platform" strategy model provide a smooth cash flow for large-scale real estate enterprises to lay out the domestic market and realize the overseas expansion；on the other hand， large real estate companies can also better support the domestic real estate business through financing platform in Hong Kong， in the meanwhile， can also regard Hong Kong platform as a kind of tool of expanding overseas business. This strategic model promotes the rapid development of large scale real estate companies， but will also cause that market concentration of the real estate industry is increasing. "Dual-platform" strategy mode is undoubtedly a tool for the large real estate companies to first to monopolize the market. 　　2. The policy support of SOE reform. The reform report at 18th Party Congress affirmed the achievements made by state-owned enterprise，at the same time，the suggestion that the reform of state-owned enterprises should be further deepened has been proposed. However， the current domestic stock market is not perfect， IPO closing experienced eight times， there are the lack of relevant laws and regulations as well as regulatory regimes， and just blindly imitate foreign capital markets to improve. Therefore， the domestic capital market does not solve the problem of the incompleteness of the SOE reform. Effective way to deepen the SOE reform is to allow public financing of large state-owned enterprises in Hong Kong， which not only provides a platform for overseas capital markets business， can also relieve property rights， incentives and other problems encountered in the joint-stock reform. through participation in overseas competition， the large scale state-owned enterprises operating efficiency can be boosted， and also improve the corporate governance structure. Currently， large-scale housing prices mostly belongs to state-funded enterprises， and state-owned enterprises reform offers a range of policy support for large housing prices listed in Hong Kong ，which is the major cause that housing prices have backdoor listing in Hong Kong.
　　3. Improve the corporate governance structure. Compared with the mainland stock market， the Hong Kong stock market is more mature and standardized. Firstly， the Hong Kong stock market has a more robust legal and regulatory system. Secondly， it has better information disclosure system and standards， although mainland stock market has developed similar disclosure regime， but the quality of information disclosure of listed companies is mixed. Large real estate companies choose cross-listed in mainland and Hong Kong，while they are subject to the constraints of the laws and regulations and disclosure requirements in the Mainland and Hong Kong， which will improve the transparency of corporate information to better safeguard the interests of shareholders， and limits the tunneling behavior of the largest shareholder. Meanwhile， listed in Hong Kong makes large-scale real estate enterprises go out of the domestic market to participate in international competition， which will help the company improve the governance structure.
　　4. expand overseas markets. In recent years， with the gradual rise in domestic housing prices， the domestic real estate industry bubble grows bigger and bigger. This naturally reminds us of the US subprime mortgage crisis， the abuse of cheap credit， and super currency pushes up housing prices，which finally led to the collapse of the real estate market. After 2008， the massive funds plus leveraged speculation flooded into the real estate market， after five years fermentation， the price earnings ratio has reached a relatively high state. At the same time， along with a large area of bank deleveraging and increasingly cautious on mortgages，purchasing power enter a state of wait-and-see， a large number of selling houses shifted to the rental housing market. In many areas， the real estate market began to appear "price surges." In order to maintain the development of enterprises， many real estate companies grab land in overseas， the additional amount of investment has entered the country， and even throws a huge investment plan. In 2014， Green， Wanda and other seven real estate companies have more than 60 billion yuan investment quota in overseas， and investment business involves integrating business such as residential， hotels， cultural tourism.Taking into consideration of the expansion of overseas markets and avoiding the impact of the domestic real estate bubble，the large real estate companies listed in Hong Kong have chosen to build "dual-platform" strategy. 　　4 Conclusion
　　Large real estate companies have chosen to be listed in Hong Kong and build the "dual-platform" strategy mode. First， taking into consideration of the development of enterprises， "dual-platform" strategy mode ensure the smooth flow of financing channels for enterprises and minimize the impact of the domestic capital market instability and policy changes. Secondly， the "dual-platform" strategy pattern is consistent with the trend of today SOE reform， and can be supported by policies. Again， this strategy mode pushes large real estate companies into the globalization of capital markets， participating global competition will help improve corporate governance structure. Finally， due to the impact of the domestic real estate bubble， the large real estate companies target overseas markets， and "dual-platform" strategy model ovide support for its exploring overseas market .
　　Main references
　　1. Wu Lihua the Study of Cross Transformation of listed companies Nanjing：Southeast University Press， 2011.
　　2. High Wenjun. Current Situation，Motivation And the Problem of the Backdoor Listing of Real Estate Companies. Managers， 2013；
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