Equity transfer in Best Growth
According to HKEX, Mr. Cheung Yu Ping’s family disposed of 221m shares in Best Growth (82.93% owned by Mr. Cheung, chairman of the company, with the remainder owned by his family) to Chengwei Evergreen Capital, at the average price of HKD1.96, on 19 November 2013. Chengwei’s equity interest in Hengdeli thus rises to 5.19% po st this transaction, from 0.59%. The sellers are Mr. Cheung’s brother an d sister; according to management. It said that Mr. Cheung’s brot her and sister will no longer have any share in Best Growth after this transaction. Mr. Cheung’s equity interest in the company remains the same, at 36.26%, before/after this transaction, as Mr. Cheung holds his stakes through Best Growth (35.15%) and under his name directly (1.11%). Management cited that Mr. Ch eung will continue to increase his equity interest in the compan y at the appropriate time.
Rationale for this transaction
Chengwei is a venture capital company founded in 2000 in Shanghai with the successful VC investment projects of Youku and Hanting Hotel. Management believes that Chengwei, as a new invest or of the company, will benefit the company’s future operations strategically , thanks to its diversified experience in VC investments. Chengwei will not have any board seats.
Other updates
Management cited that current trading is similar to 1H13 performance. In China, the mid-end market performed well while consumer sentiment in the high-end market remained low. In HK, business recovered gradually. As for the shares pledged (550m shares or 11 % of total stake) to Swatch (UHR.VX, Buy, CP 597.50 CHF), management explained that the expiry date is in July 2014. Management believes that Mr. Cheung will repay a US$100m loan.