[photopress:Citic_20Plaza_20Guangzhou.gif,full,alignright]CITIC Pacific Ltd., a Hong Kong-based diversified investments holding company is RMB245 million for a 10 percent stake in CITIC Square, which owns CITIC Square in the Jingan district of Shanghai.
Now it gets complicated.
CITIC Pacific will purchase the 10 percent stake from its own subsidiary Shanghai Jingan City Trading through its wholly-owned subsidiary Eldwin.
The statement said that funding for the purchase will come from the company’s internal resources although to a non-finance savvy outsider it looks as if someone is taking money from one pocket and putting into another.
Once the transfer has been completed stake, CITIC Pacific and its subsidiaries will have a 90 percent interest in CITIC Square which is 10 percent more than they had before. That makes CITIC Square worth RMB2,450,000.
The remaining 10 percent interest will continue to be held by Swire Properties, a company with a long tradition in China. CITIC Pacific said that it expects the property market in China to maintain a strong growth in the medium and long term and its large stake in CITIC Square will allow CITIC Pacific to have full control of the board.
That last bit is interesting. The amount of control you have of a board is not much different whether you have 80 or 90 percent. But the other shareholder is Swire which has a very long and interesting tradition in China.
First it was a Liverpool import-export company the early years of the 19th century. Then, in 1861, the company John Swire began to trade with China through agents Augustine Heard. In 1866, in partnership with R.S. Butterfield, Butterfield & Swire was established in Shanghai. Four years later, a Hong Kong branch of Butterfield & Swire was also opened. The partnership did not last long and Butterfield bailed out and almost disappeared although the name remained in the title until some fifteen years ago. It is said the Butterfields found dealing with the Swires difficult and wearing. Other companies will attest this can sometimes happen.
In 1974, Butterfield & Swire in Hong Kong was renamed John Swire & Sons and was very much run by members of the Swire family.
[photopress:Adrianswire.jpg,full,alignleft]Earlier, John ‘Jock’ Swire (1893-1983). Later, Sir Adrian Swire, an ex-Battle of Britain pilot (seen here) who retired in 1998. The family is estimated by Forbes to be worth about $1.7 billion. A new generation of Swires has arrived. Nephew Barnaby Swire joins brother John on the board of the privately owned John Swire & Sons, Swire Pacific’s largest shareholder.
This is, of course, not the only Swire venture into real estate in China.
In 2002, Swire Properties signed a joint venture agreement with the Guangzhou Daily News Group, to develop and manage a four million square foot complex in the upmarket Tianhe district of Guangzhou, scheduled for completion in 2008, and to be known as the Taikoo Hui Guangzhou Cultural Plaza. The Taikoo part of the name comes from the Chinese name of Swire in its many early ventures.
The Swire’s core businesses in Hong Kong are held by the publicly-quoted Swire Pacific Limited and has property, aviation (much of Cathay Pacific and a good slab of DragonAir), beverages, marine services, and trading & industrial.
It is possibly the single biggest Coca Cola bottler in the world and in Australia runs, among many other things, Frigomobile which is the butt of vulgar jokes by insensitive Australians.)
Source: China Knowledge and research.