Blackstone’s potential acquisition of a stake in New World Development (NWD) will help the embattled Hong Kong-listed developer improve its balance sheet and liquidity, benefiting creditors and shareholders alike, according to analysts.
The New York-based private equity giant’s investment in NWD could take the form of “shareholder loans or direct equity financing, as well as offloading noncore investment properties”, said Jeff Zhang, an equity analyst at Morningstar. “That said, uncertainties remain on the deal structure, as the continued rally in NWD’s share price may curb the size of Blackstone’s share purchase.”
NWD’s shares rose 4.4 per cent on Friday, taking the gains to nearly 57 per cent this month amid investor speculation about the stake sale. The Cheng family, one of the city’s wealthiest clans, owns 45.33 per cent of NWD.
NWD said late on Thursday that its parent, Chow Tai Fook Enterprises (CTFE), had been approached by potential investors after reports that CTFE could sell part of its stake to Blackstone.
Bloomberg reported earlier that Blackstone – the world’s biggest asset manager – was in discussion to become the single largest shareholder of NWD, citing people familiar with the matter.
Under the proposed arrangement, the US alternative asset manager would lead a restructuring of NWD, with the developer selling assets to improve liquidity. The size of Blackstone’s potential stake was not disclosed, the report said.
