CapitaLand subsidiary to invest S$155m in JV companies in China

Should accelerate CapitaLand's PRC expansion.

CapitaLand Limited (CapitaLand) announced that its wholly-owned subsidiary, Shanghai Zhong Da Industry Development Co., Ltd. (SHZD), has agreed to subscribe for a 60% equity interest in each of Chengdu Kai Guang Property Co., Ltd. and Chengdu Hong Hu Zhan Property Co., Ltd. for a total cash of RMB752 million or approximately S$155 million.

The Subscription is part of CapitaLand’s ongoing business development and is in line with CapitaLand’s strategy to further strengthen its presence in the People’s Republic of China (PRC), the company said.

SHZD, a company registered in the PRC has entered into a Joint Venture Agreement (JVA) with the existing sole shareholder of the JV Companies, a party unrelated to CapitaLand in connection with the Subscription. Upon completion of the Subscription , SHZD will hold a 60% equity interest in the JV Companies while the existing shareholder will hold the remaining 40% equity interest.

The JV Companies are registered in the PRC and are set up to hold two adjacent residential sites in New Southern Area, Chengdu City, Sichuan province, PRC. The Sites measure a total of approximately 133,333 square metres and would be developed into about 4,600 apartment units with a gross floor area of 479,850 square metres.

The Subscription Amount was arrived at on a willing-buyer and willing-seller basis, taking into account, amongst other factors, the total net asset value of the JV Companies (post Completion) of RMB1,253 million (approximately S$259 million).

Completion is subject to the conclusion of satisfactory due diligence and approval from the governmental authorities of the PRC and is expected to take place in about the second quarter of 2014. Upon Completion, the JV Companies will become 60%-owned subsidiaries of CapitaLand.

The Subscription is not expected to have any material impact on the net tangible assets or earnings per share of the CapitaLand Group for the financial year ending 31 December 2014.