PE-backed Red Star Macalline files for HK IPO
Red Star Macalline Group, a private equity-backed shopping mall operator in China, has filed to list on the Hong Kong Stock Exchange.
The company did not indicate how many shares would be sold or at what price. Candlewood and Springwood, both of which are affiliates of Warburg Pincus, own 10.97%% and 5.88%, respectively, of Red Star Macalline. The business is controlled by its founder Jianxing Chen.
According to a regulatory filing, the company applied to list on the Shanghai Stock Exchange in December 2012. It responded to initial inquiries made by the China Securities Regulatory Commission (CSRC), but recognizing how many A-share listing applications were pending regulatory review, decided to pursue a Hong Kong IPO instead. The CSRC approved the H-share listing in March.
Red Star Macalline claims to be the largest operator of home improvement and furnishings-themed shopping malls in China. It had a network of 158 malls across 115 cities with a total operating area of 10.77 million square meters as of December 2014. This comprised 51 portfolio malls, which are owned or leased by the company, and a further 106 malls that are managed on behalf of third-party clients.
Red Star Macalline has a development pipeline of 25 portfolio malls and 359 managed malls.
The company, which was founded in 1992, started to run properties on a contract basis under the Red Star Macalline brand in 2007. In 2011, it disposed of all subsidiaries and associated businesses involved in real estate development and since then the company has focused on the operation and management side. This includes an expansion into online-to-offline services in 2012.
Warburg Pincus invested RMB495 million ($79.7 million) in Tianjin Red Star in 2007 as Candlewood and Springwood took stakes of 14.46% and 8.44%. The private equity firm committed RMB500 million to Red Star Macalline the following year, giving Candlewood 10.73% and Springwood 6.27%. The two entities merged in 2010 and this was followed by a further round of investment. Participants included another Warburg Pincus affiliate, Lianyungang Fairbay.
Red Star Macalline was converted to a Sino-foreign investment joint stock company in 2011. In January of this year, Candlewood and Springwood made another investment of RMB433 million.
The company reported revenue of RMB7.93 billion in 2014, up from RMB6.36 billion the previous year. Net profit increased from RMB3.27 billion to RMB3.92 billion over the same period.
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