Chinese property giant Greenland Holding Group is accelerating its drive into financial companies, making a network that spans brokerages, investment banking, private equity funds and insurance.
Greenland said it had been confident it could break into these new places and challenge incumbents by drawing upon assistance from its house company.
“Only businesses with an yearly income greater than 100 billion yuan can create a monetary empire which will generate income from your broader marketplace,” Geng Jing, chairman of Greenland Monetary Holding Group, a subsidiary of the Greenland Group, mentioned at the China Actual Estate & Finance Forum on Thursday. “Those with revenue below one hundred billion yuan could only earn money from their own property business [by internal funding].”
The parent company in the first nine months with the year generated revenue of 172 billion yuan through home sales, according to China Real Estate Information Corp.
Greenland had ranked as China’s largest house developer by sales in 2014, but slipped to fourth this year.
Meanwhile, revenue was up 22 per cent from a year earlier, lifted by the home bull market place, but its profit margin was eroded by soaring land prices, which explains why the company is seeking out new businesses.
The money holding company established a securities unit in Hong Kong in September, and is applying for an investment banking license. The Hong Kong securities company will also set up overseas authentic estate investment trusts, or Reits, it said in an earlier statement.
Greenland’s money services arm in China is engaged in businesses that include micro lending and asset management. It also has stakes in a few city-level commercial banks.
“If we are optimistic about a project, we can do debt-financing or equity-financing through personal equity money. If the projects run into trouble, our vast home business enterprise can take over the asset, which provide a guarantee to investors,,” Geng mentioned.
The group’s private equity unit has invested in non-property sectors that are related to the commercial residence enterprise, he stated.
IMAX China Holding opted to accept investment from Greenland’s private equity unit because the tie-up would also the cinema company access to Greenland property division which operates several malls. A rival investment offer from China Vanke was turned down because its home assets are primarily residential, Geng said.
Focus Media, China’s largest outdoor advertising agency, accepted Greenwood as an equity investor in part because of synergies related to its house division. The benefits included access to display advertising space located in elevators at residential projects linked to Greenwood.
“Greenland’s properties actually are a platform, opening up to unlimited fiscal providers opportunities,” Geng said, adding that economic services already contributed one-third in the conglomerate’s profit.
Not everyone is convinced the company’s diversification will be a success. Moody’s Investors Service downgraded Greenland and its Hong Kong offshoot’s rating and outlook to “negative” in May, citing its high debt leverage and the volatile nature of its non-property businesses.