Foreign investors are vying for a stake in Beijing Wangfujing Department Store (Group) Co Ltd, China's top Shanghai-listed retailer with 15 department stores across the country.

 

Warburg Pincus, Carlyle Group and Goldman Sachs are among the more than 20 foreign investors that have been seeking a stake in Wangfujing since the first half of 2006.

 

"The plan to sell part of Wangfujing's shares to foreigners was decided as early as last May, but as for detailed execution of the plan, nearly no one knows at present," a financial adviser to Beijing's retail sector restructuring, who declined to be named told China Daily yesterday.

 

According to the latest development, foreigners may acquire only 25 percent of Wangfujing's total 393 million shares from its largest shareholder Beijing Beikong Commercial Investment Co Ltd.

 

But the financial adviser said, "foreign investors could buy a stake in Wangfujing of as high as 49 percent" in May last year.

 

At that time, the Beijing municipal government aimed to maintain its controlling stake in Wangfujing through its wholly owned company Beijing Beikong, which holds 197 million Wangfujing shares, accounting for 50.13 percent of the total.

 

"Most foreign investors wanted to gain control of Wangfujing through buying its shares, but the Beijing municipal government refused to lose control," said the source.

 

Carlyle reportedly sought a 60 percent stake in Wangfujing, but was rejected by the local State-owned Assets Supervision and Administration Commission (SASAC).

 

According to the source, Carlyle's merger and acquisition group has taken charge of negotiating with Beijing's SASAC while Warburg Pincus has already held several talks with Wangfujing. Goldman Sachs dropped out of the running six months ago.

 

News of the foreign purchase of Wangfujing stakes, together with the completion of its share reform last December, pushed up its share price from 10 yuan last May to the current 27 yuan, jumping some170 percent.

 

"Wangfujing's share price has continued to soar in the past year, which led some investors to suspect that 27 yuan is a bit higher than its deserved value based on analysis of its corporate fundamentals," said Chen Chen, a retail stock analyst at CITIC Securities.

 

(China Daily January 26, 2007)