PAG special sits fund invests $125m in China property developer

According to the purchase agreement, PAG Asia Opportunity Fund - a $275 million special situations vehicle that closed in 2006 and falls under the firm's absolute returns division - will subscribe to convertible notes with a conversion price of HK$1.56 per new share.

Assuming full conversion of the 625 million shares, the private equity firm will own 9.35% of China South City's enlarged share capital. The notes bear an interest rate of 6.5% per annum and mature in April 2018.

"China South City is uniquely positioned to take advantage of the growth potential in China's booming logistics and trade centre sector fueled by China's latest drive towards urbanization," said Eddie Hui, managing partner at PAG. "We have every confidence that China South City is the right company to seize these opportunities. We share the vision of the company, and their value proposition is compelling."

China South City develops large-scale integrated logistics and trade centers in China, selling and leasing properties as well as providing ancillary services to occupants that cover warehousing and logistics, convention and exhibitions, outlet operation and management, e-commerce and property management.

The company started in Shenzhen and has since expanded into Nanchang, Xi'an, Nanning, Harbin and Zhengzhou. It listed in Hong Kong in 2009.

Net profit for the six months ended September 2012 came to HK$737.9 million, up 37% year-on-year, as revenue rose nearly threefold to HK$2.5 billion. This was mainly attributable to sales and leases tied to China South City properties in Shenzhen, Nanchang and Nanning. Net profit for the year ended March 2012 was HK$1.3 billion, up 140.3% year-on-year, as revenues jumped 64.3% to nearly $3.7 billion.

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• Topics
• Real estate
• Credit/Special Situations
• Greater China
• PAG
• Real estate
• China