Shares of Hong Kong property developer New World Development Co (HK:0017) surged on Friday following media reports that Blackstone Inc (NYSE:BX) is in advanced talks to take a lead ownership position in the company.
Hong Kong-listed New World stock rose as much as 12% to HK$12.45, marking its strongest level since November 2023. The rally later moderated, with the shares trading 6% higher at HK$11.78 as of 02:12 GMT.
The report, attributed to people familiar with the matter, said Blackstone is negotiating a transaction that would supplant the Cheng family as New World’s largest shareholder. The sources noted that the size and structure of any potential investment have not been disclosed, and that discussions remain preliminary and could fail to produce a deal.
In a filing to the Hong Kong stock exchange, New World confirmed that its controlling shareholder has been approached by several potential investors. The company emphasized that no binding agreement has been reached and that there is no certainty any transaction will materialize.
New World is controlled by the Cheng family through Chow Tai Fook Enterprises. The developer has been operating under pressure from elevated debt levels and weak property sales, conditions that the company said reflect broader difficulties across the property sectors in China and Hong Kong.
Summary
Market activity in New World Development accelerated after reports that Blackstone is in advanced discussions to acquire a stake large enough to become the developer’s single largest shareholder. New World confirmed it has been approached by multiple parties but reiterated that no deal is guaranteed.
Key points
- New World shares spiked as much as 12% to HK$12.45, their highest since November 2023, before settling at HK$11.78 (up 6%) as of 02:12 GMT.
- Reports indicate Blackstone is in advanced talks to overtake the Cheng family as New World’s largest shareholder, though transaction size and structure remain undisclosed.
- New World acknowledged approaches by multiple potential investors in an exchange filing and stressed that no binding agreement exists.
Risks and uncertainties
- The discussions may not culminate in a transaction - there is no certainty a deal will be completed.
- Details about the size and structure of the potential stake have not been released, leaving the implications for control and financing unclear.
- New World faces ongoing sector challenges, including high debt and weak property sales, which could influence investor interest and deal terms.
Market participants should note that the situation is fluid: the report of talks has already moved New World’s share price, but the company’s filing makes clear that interest from potential investors has not yet produced a binding agreement. The potential entry of a major private equity investor - if it were to occur - could alter the ownership landscape, but at present, key details remain undisclosed and the outcome uncertain.