March 4 (Reuters) - Private equity firm Blackstone's talks with New World Development have stalled as the Cheng family, which runs the Hong Kong property developer, is resisting giving up control,
Blackstone's $4 billion New World talks stall over control, Bloomberg News reports
Stalled Negotiations and Family Control in New World Development
By Kane Wu and Mihika Sharma
Background of the Blackstone-New World Talks
March 4 (Reuters) - Talks between Blackstone and New World Development have stalled, as the Cheng family resists giving up control of the Hong Kong property developer, Bloomberg News reported on Wednesday, citing people familiar with the matter.
The New York-based private equity firm proposed investing about $2.5 billion in a special-purpose vehicle that would make it New World's largest shareholder, while the Cheng family would contribute $1 billion to $1.5 billion, the report said.
Alternative Capital Raising Options
Discussions have slowed as the family explores alternatives that would bring in capital without surrendering control, the report added.
The Cheng family has been in discussions with a handful of financial institutions to sell an equity stake in New World and Blackstone was the most advanced party in the process, a person with direct knowledge of the matter told Reuters.
Investor Alignment and Control Considerations
Any investor would have to align their interests with the family and a change of control would be unlikely, said the person and a second source familiar with the situation.
Both declined to be identified as the discussions were private.
Blackstone declined to comment. New World Development did not immediately respond to a Reuters request for comment.
The Cheng Family's Influence and New World's Financial Position
The Cheng family is one of Hong Kong's wealthiest dynasties. Through their private conglomerate, Chow Tai Fook Enterprises, the family owns 45.24% of the developer, according to LSEG data.
The Cheng family's grip on New World has long been central to the group's strategy.
Debt Challenges and Asset Sales
The company, the most heavily indebted developer among its peers, has been seeking to refinance its debt and bolster liquidity as Hong Kong's property sector remains under strain from tighter credit conditions and a weak office market.
The family, without any debt coming due imminently, is seeking to bring in an equity investor to ease debt pressure, the first source said.
New World has meanwhile been in negotiations with investors to sell various assets including the K11 Art Mall in Kowloon, but it has yet to find a buyer.
Market Performance
Shares of the company, with a market value of about $3 billion as of Wednesday, are up about 26% so far this year.
(Reporting by Kane Wu in Hong Kong and Mihika Sharma in Bengaluru; Editing by Sumana Nandy, Mrigank Dhaniwala and Thomas Derpinghaus)
