- Sep 02, 2015
- China New Town Enters into Strategic Cooperation Framework Agreement with Shenzhen Venture Capital Group
(Hong Kong and Singapore, 1 September 2015) ― China New Town Development Company Limited – the future blueprint planner and leading developer of integrated new towns in China (the “Company”, “CNTD”, the “Group”; HKSE: 1278.HK; SGX: D4N.SI), is pleased to announce that on 1 September 2015 the Company has entered into the Strategic Cooperation Framework Agreement (the “Strategic Agreement”) with Shenzhen Venture Capital Group Co., Ltd. (“SVCG”), pursuant to which the parties shall establish long-term strategic relationship and explore cooperation in the integration of industrial development and urbanization to invest, develop and operate various specialized industrial parks in the selected regions with solid industry fundamentals such as Yangtze River Delta, Pearl River Delta and Bohai rim region, etc., in close adherence to national strategy of new-type urbanization. Pursuant to the Strategic Agreement, the Company will acquire 13.9% of the share capital of Jiangsu Hong-tu Software Venture Capital Investment Ltd. (“Hong Ruan Investment”) with a consideration of RMB37.5 million, and participate in the development of land parcel A5 of Yuhuatai District Software Valley in Nanjing (the “Land Parcel A5”), as the first project launched under the Strategic Agreement.
Riding on the national policy trend of the integration of industrial development and urbanization, CNTD and SVCG capture the opportunities in industrial park development and operation
Pursuant to the Strategic Agreement, the Company and SVCG (the “Parties”) will cooperate in industrial park development, industrial park operation, industry nurturing, direct investment in related companies. Meanwhile, the Parties will leverage the industry knowledge and strategic resources in their respective fields to pursue co-investments. The Parties agreed to launch cooperation in Yangtze River Delta, Pearl River Delta and Bohai rim region, as well as selected regions in China’s mid-west with solid industrial fundamentals. The principal cooperative model shall be to jointly raise and establish industrial investment funds. In addition, subject to practical conditions, the Parties will also consider to establish joint ventures for potential co-investments.
China Development Bank Capital Corporation Limited ("CDB Capital"), the controlling shareholder of the Company, is currently one of the biggest investment institutes in the field of primary land development in China and enjoys nationwide network resources in primary land development. In addition, CDB Capital can introduce quality resources such as commercial services, education and healthcare by leveraging the strategic resources from China Urbanization Strategic Alliance. SVCG is a leading institutional investor in China’s high-tech industry, with over 15 years of venture capital experience and quality project portfolio through industrial investment in China. The strategic cooperation is consistent with the new-type urbanization trend of the integration of industrial development and urbanization.
The Parties established long-term relationship, realizing the development trend of China in new-type urbanization - the integration of industrial development and urbanization. The new-type urbanization will focus on industrial and business function with comprehensive ancillary facilities by leveraging industrial agglomeration effect, leading to the improvement of living environment and employment and ultimately regional vibrancy and land value appreciation. The integration of SVCG’s project resources and the strategic resources of CDB Capital China Urbanization Strategic Alliance imbues the Company with richer resources in industrial development. The strategic cooperation is expected to drive the launching of more quality industrial park projects, which will constantly improve the Company value and achieve better return of the shareholders.
With its prime location, land parcel A5 enjoys enormous profitability potential
After the transaction, the Company will hold 13.9% of the equity in Hong Ruan, and SVCG will remain as the largest shareholder. Hong Ruan Investment currently holds 49% stake in Nanjing Software Valley Information Security Technology Industry Development Co., Ltd. with the principal business of developing the land parcel A5 in Nanjing Yuhuatai Software Valley, which is expected to be developed into office building with planned total gross floor area of approximately 180,000 square meters.
Among the top cities with healthy economic structure and rapid and stable economic growth in China, Nanjing has a vibrant real estate market with robust fundamentals and is a region that the Company has strategically deployed for long-term growth. The land parcel A5 is located in the prime zone of Nanjing, and the centre of Nanjing Software Valley, China’s largest base of communications software, adjacent to the Nanjing high speed railway station and Hexi central business district, therefore enjoying convenient transportation. Software Valley has gathered over 500 software companies with more than 110,000 employed professionals. The robust demand of office properties in the region and scarcity of quality land resources stimulate the growth in the price of land, therefore the land parcel A5 represents unique land resources to invest in. The A5 land parcel covers a total site area of 34,296 square meters with planned total gross floor area of 179,626 square meters, and will be primarily developed for office building use. The land parcel A5 is expected to be developed into a well-equipped mature industrial park after the injection of resources from CDB Capital China Urbanization Strategic Alliance and the resources of SVCG in the field of industrial investment. The land enjoys substantial value appreciation and thereafter bring the Company sustainable return of investment. The co-development of the project represents the first launching of secondary land development in the area after the Company’s launching of Nanjing Project last November. Strategic cooperation with such a strong partner represents a milestone of the Company’s business development. The Company expects to implement the cooperation rapidly and replicate the development model in other projects around China by seizing the cooperation opportunity.
With the integration of resources of CDB Capital and SVCG, the Company can replicate the new development model in other industrial parks around China
The Company, a core listed company and operating platform for CDB Capital in the field of urbanization, enjoys fully supports in both financial and project resources from CDB Capital. Its strategic alliance with SVCG is considered as a successful collaboration with complementary advantages integration. The development of the land parcel A5 is consistent with the “industry investment and industrial park development” integrated model. The land parcel A5 enjoys prime location and is expected to establish comprehensive industrial value chain after the introduction of the extensive resources of CDB Capital and SVCG, and therefore the value of the region will increase significantly. The Company expects to enjoy substantial value appreciation and investment return throughout the project’s development.
With reference to the privileged positions of both parties in network resources nationwide, the Company expects to replicate the “industry investment and industrial park development” integrated model in other industrial parks, so as to vastly acquire large amount of land resources nationwide in strategic locations in major cities of the country, ultimately to improve the overall quality of the Company’s assets and return to shareholders.