Chinese billionaire Wang Jianlin will relinquish control of his key shopping-mall management unit under a deal with investors just in time to avoid a 38 billion yuan (US$5.3 billion) redemption before the end of the year, helping ease a cash crunch following a recent bond-default alarm.

Dalian Wanda Commercial Management Group (DWCM), the tycoon's flagship, will lower its stake in Zhuhai Wanda Commercial Management to 40 per cent, while outside investors led by Asia-focused private equity fund PAG will own 60 per cent of the unit, according to separate statements released by the parties on Tuesday.

The changes followed an agreement to unravel an investment plan in August 2021, when outside investors injected fresh capital in Zhuhai Wanda, hoping to profit and exit via an initial public offering in Hong Kong before the end of 2023.

Do you have questions about the biggest topics and trends from around the world? Get the answers with SCMP Knowledge, our new platform of curated content with explainers, FAQs, analyses and infographics brought to you by our award-winning team.

DWCM last reported controlling 78.9 per cent of Zhuhai Wanda, according to its Hong Kong stock listing application in June, while PAG and other investors including directors and senior managers had 21.2 per cent. Zhuhai Wanda manages 494 shopping malls in China, and is billed as the world's largest operator by floor space.

Wang Jianlin speaks to the media after attending the Asian Financial Forum in Wan Chai, Hong Kong, in January 2016. Photo: Nora Tam alt=Wang Jianlin speaks to the media after attending the Asian Financial Forum in Wan Chai, Hong Kong, in January 2016. Photo: Nora Tam>

PAG and other investors, including units under Ant Group, Tencent Holdings and Citic Securities, spent 38 billion yuan, then valued at US$5.9 billion, in Zhuhai Wanda in August 2021. That investment deal was struck at 24.84 yuan or US$3.86 per share, valuing Zhuhai Wanda at US$28 billion.

The plan was to list Zhuhai Wanda before the end of 2023, failing which the investors could ask DWCM to buy back their stakes with a minimum return of 8 per cent.

DWCM redeemed the investment without offering any details, PAG said in its statement on Tuesday. Investors agreed to "reinvest in Zhuhai Wanda with the proceeds", the statement added.

"Dalian Wanda and PAG, together with the other major shareholders, have pledged to further improve the governance of Zhuhai Wanda, maintain the stability of the management team, and jointly support the long-term growth of the business," PAG said. "This new agreement reflects our confidence in Zhuhai Wanda's growth potential and its management capabilities."

Zhuhai Wanda has consistently outperformed its financial targets. It had an after-tax profit of 5.3 billion yuan in 2021, 7.5 billion yuan in 2022 and an estimated 9.5 billion yuan in 2023, according to statements on Tuesday, matching forecasts in its provisional listing documents.

Wang, 69, has been selling assets to repay debt. The crunch set off alarm bells last month when developer Wanda Properties sought to extend the maturity of a US$600 million bond due in January 2024 by 11 months. Bondholders have since consented, agreeing to an instalment payback plan.

Last week, Wang agreed to sell a 51 per cent stake in Beijing Wanda Investment, which controls Wanda Film Holding, to Tencent-backed China Ruyi Holdings. He had earlier sold a 49 per cent stake in July to help repay US$400 million worth of maturing bonds.

Zhuhai Wanda may have to refresh its proposed listing documents after the latest agreement to reflect the shareholding changes. The firm last month terminated Credit Suisse as one of the three coordinators. CLSA and JPMorgan Chase hold the mandate.

This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2023 South China Morning Post Publishers Ltd. All rights reserved.

Copyright (c) 2023. South China Morning Post Publishers Ltd. All rights reserved.