(Oct 2): Bain Capital is exploring a potential investment in Hong Kong’s New World Development Co as the embattled property company looks at ways to pay down its heavy debt burden, people with knowledge of the matter said.
The private equity firm has been studying a potential deal that could also see New World’s controlling Cheng family inject fresh capital, some of the people said. Discussions are ongoing and there’s no certainty that Bain will decide to proceed with a transaction, the people said, asking not to be identified because the information is private.
Shares of New World were volatile in Friday trading. They erased earlier losses following news of the Bain negotiations, briefly spiking higher, before again trading down 2.3% at 3:43pm in Hong Kong.
A representative for Bain declined to comment. Spokespeople for New World and the Cheng family didn’t respond to requests for comment.
New World, one of Hong Kong’s oldest property giants, has numerous residential, office and mall projects across the city as well as mainland China. Like many developers in the region, it’s been caught in a prolonged property downturn. Falling home prices, weak consumer sentiment, and a high interest rate environment have squeezed revenues and pushed up borrowing costs.
New World’s total debt was about HK$143 billion (US$18 billion or RM73.5 billion) at the end of June, according to its latest results announcement. A portion of that debt is due in 2028.
Talks with Bain follow previous failed attempts by other global investors. Blackstone Inc walked away from a US$4 billion tie-up with New World after the Cheng family refused to give up control of the company, Bloomberg News reported in May.
New World announced this week it’s exiting a multi-billion dollar project with Hong Kong’s Airport Authority, which analysts said could increase the likelihood of an investor coming in to support New World with a capital injection.
The company told shareholders that it took a HK$18.3 billion writedown from scrapping the 11 Skies retail and office complex, a major factor behind its third annual loss in a row.
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