Raffles Education raises stake in Chinese developer for $49.21m

It will use the developer’s vacant land assets for education facilities.

A subsidiary of Raffles Education (REC) is buying an additional 35.9% equity interest in Langfang Hezhong Real Estate Development for an aggregate consideration of $49.21m (RMB254m), the company announced.

REC’s subsidiary Langfang Tonghui Education Consulting entered into a sale and purchase agreement (SPA) with Langfang Heying Real Estate Development.

Some vacant land assets totalling 332,833sqm had previously been injected into the target company with the intent to develop it into a commercial and residential development aiming to increase the vibrancy of Oriental University City, a university campus located in Hebei province, which is owned by REC.

However, the vendor’s efforts to convert the land to commercial and residential land titles over the last six years had been stalled by numerous protracted challenges, and the completion of the intended mixed development is not in sight.

“As the proposed acquisition would enable the company, through the purchaser, to obtain majority control over the target company, it would allow [REC] to rationalise the land use rights of the vacant land into education facilities instead of proposed mixed commercial and residential development,” the announcement stated.

The target company is a limited liability company that was incorporated in China in March 2014. The Target is principally engaged in the business of property development and property leasing and has a registered capital of $63.29m (RMB318.8m). The vendor and REC’s equity interests in the target company is currently 65.9% and 34.1%, respectively.