THE SHARES of Singapore-listed China New Town Development shot up as much as 10% this morning to touch 6.4 cents following news of its strategic alliance with China Development Bank Capital Corporation to develop small town developments in suburban Beijing.
China New Town Development (CNTD), a pioneering non state-owned new town developer focused on planning and developing new town projects in China, said it signed the “Strategic Cooperation Agreement on Comprehensive Town Development” with the Beijing Small Town Development Fund, a fund jointly initiated and founded by the Beijing Municipal Development and Reform Commission (BMDRC) and China Development Bank Capital Corporation Ltd (CDBC) in Beijing over the weekend.
China New Town is very excited given how important a role urbanization plays in China’s 12th and 13th Five-year Plans.
The parties will form a long term strategic partnership and jointly explore the development opportunities in a series of suburban Beijing small towns that the Beijing Fund invests in, inclusive of their master planning, constructions and operations.
Mr Shi Jian, Chairman of CNTD, said: “We are very excited about forming this strategic partnership with BMDRC and CDBC. With a total targeted equity of around RMB 10 billion for the Beijing Fund, CNTD’s participation with its status as a strategic partner will prove extremely valuable in its future prospect.
“China’s ‘12th Five-year Plan’ clearly outlines the vision of an economic growth model with metropolitan areas as the backbone and small-to medium-sized cities being the main drivers. Promoting small town development is the engine to promote urbanization and generate strong and sustainable domestic consumption demand for the country, and this uniquely positions CNTD to primarily and directly benefit from this national policy.”
Mr. Shi added that CNTD believes it has a very bright future ahead in terms of growth and market positioning.
“As new town development is a capital intensive business with high barriers to entry, introducing strategic partners with strong political influence and financial power will definitely enhance the company’s future business development and solidify its leading advantages in mid- to long-term investments in value and its financing flexibility.”
Currently, in addition to China New Town’s flagship Shanghai Luodian project, famous for its European styled architecture, CNTD has always attracted local governments as its joint venture partners in the new town projects, inclusive of its Wuxi and Shenyang projects.
“Following the introduction of dual leaders BMDRC and CDBC, the company is confident its market leadership in the new town development industry of China will be further enhanced,” Mr. Shi said.
The agreement sets out two forms of cooperation going forward.
First, through a strategic partnership, CNTD, BMDRC and CDBC will jointly explore opportunities in relation to the comprehensive town development business, including areas of 1) infrastructure construction (including energy, public security, environment, transportation and communications, etc.), 2) services facilities construction (including parks, healthcare facilities, schools and multi-functional small town commercial service complexes, integrating business, leisure, entertainment, shopping, hotel as well as comprehensive residential functions), 3) industrial development and construction (including industrial parks, cultural, travel and other service industrial projects, and the development and construction of premium agricultural projects), and 4) residential construction (including participating in the development and construction of high quality housing for low-income families and affordable housing).
In addition, the parties intend to cooperate in the areas of financing, project development and other aspects, depending on the actual needs of specific future projects.
This includes but is not limited to the area of project financing (as in raising money from the Beijing Fund and from other financial institutions) and project development through a joint venture arrangement.
Pursuant to the agreement, the parties will separately enter into a more concrete cooperation agreement after reaching consensus on the future cooperation in any specific projects.
China New Town Development Vice Chairman Stan Yue said: “Since establishing the Shanghai Luodian New Town project in 2002, CNTD has been firmly committed to engaging in project master planning, designing and developing new towns with substantial potential in China.
“Also, through building comprehensive quality ancillary facilities in those towns, we have successfully turned bare lands into valuable residential and commercial properties, the value of which is fully recognized by the market and leading market players.”
He added that the Beijing Government and CDBC have expressed their strong approval for CNTD’s core activities and its seamless adherence to national policy by reaching this agreement.
“This in turn will definitely be beneficial to CNTD’s development in the long run.”
Established in August 2009, CDBC -- a wholly owned subsidiary of CDB -- has a registered capital of approximately RMB 35 billion.
Its principal activities include private equity funds, direct equity investment and investment advisory. CDB operates directly under the jurisdiction of the State Council, and is regarded as a policy bank, serving as the engine to power the national government’s economic development policies.
In order to comply with China’s trend toward commercial reform, as well as to serve the mid-long term development strategies of the national economy, CDB has actively diverted social capital in the form of equity investment through the CDBC, amplifying and improving the financial support to the key industrials development projects in terms of M&A and restructuring, as well as the projects in the areas of energy and mining, cities and towns development, and infrastructure constructions, etc.
Established in June 2011 and jointly initiated and founded by the BMDRC and CDBC, the Beijing Fund was the first ever small town development fund of the Beijing Government with a total targeted equity of around RMB10 billion.
With the integration of government guidance and market operation, CDB plays an active role in lead initiating and arranging syndicated loans and attracting social fund to further boost the financial war chest of the Beijing Fund for specialty investments in the suburbs of Beijing, in tandem with the Beijing’s small town development campaign outlined in the “12th Five-year Plan.”
It has the goal of raising over RMB 30 billion of capital in the form of equity and bank loan within the “13th Five-year Plan,” which shall greatly accelerate the country’s urbanization trend with its enhanced financial influence, CNTD added.
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