SHENZHEN Metro Group’s purchase of the second-biggest stake in China Vanke may pave the way for it to take control of the Shenzhen-based property giant and put an end to a year-long corporate power struggle.

    Vanke, the nation’s biggest property developer by market value, has been in crisis since Baoneng Group, a financial conglomerate, built up a stake of 25 percent and sought to oust management.

    The US$5.4 billion sale of the 15.3 percent stake by China Resources Group brings in a strong ally, analysts said, even if it falls short of previous plan to make the subway operator its top shareholder via an asset swap. That had to be abandoned last month after Vanke could not get major shareholders on board.

    The subway operator in one of China’s hottest real estate markets is expected to buy more shares from other major shareholders, including Baoneng and Vanke’s main rival China Evergrande Group, which also quickly built up a 14 percent holding late last year to be its No. 3 shareholder.

    “Shenzhen Metro and Vanke is a strong tie-up because Shenzhen Metro has resources in core property assets and land, while Vanke has the operational capability,” said ICBC International analyst Li Xingwen.

    Vanke, which began as a Shenzhen State-owned firm in the 1980s before listing in 1991, is one of the biggest players in the Shenzhen real estate market, which saw prices soar 30 percent last year.

    Li added that while Shenzhen’s economy was very strong, it did not have many big enterprises or State-owned companies and taking control of Vanke would give it earnings from one of the world’s top 500 companies.

    An end to the rare high-profile power struggle in China could help Vanke regain momentum after losing the title of the nation’s No. 1 property developer by sales to Evergrande last year.

    It has said that its projects were facing the risk of cancellation, banks were reconsidering credit ratings and employees were being headhunted.

    “We believe Shenzhen Metro will be happy to retain most of Vanke’s existing board members in March 2017 when the company re-elects the board of directors. The stabilization of the management team should help retain high-quality employees,” said Credit Suisse analyst Alvin Wong in a research report.

    Baoneng, which spent some 45 billion yuan on building up its holding, has said little about its ultimate intentions.

    (SD-Agencies)