Equity Office moves in on Yida Group
Updated: 2007-09-08 06:24
Equity Office, the US commercial property developer acquired by Blackstone Group LP in February, is close to buying Northeast China's Yida Group, the largest developer of software parks in China.
"We have been in talks with Equity Office for a year and expect to seal the details of the deal on September 17, including price and share structure," said Sun Yinhuan, chairman of Yida Group, on the sidelines of Summer Davos in Dalian.
Privately held Yida Group started building software parks in 1998 and has invested 5.5 billion yuan in the first phase of the Dalian Software Park, a 3-million-sq-m project that houses international tech giants such as Dell and Accenture.
"Once we've completed the deal, we may consider launching a real estate investment trust for our software park to fund the further growth of our business," said Sun, declining to reveal the value of the sale.
The Dalian-based developer is now expanding into other cities around the nation, trying to cash in on China's booming software outsourcing industry. The company and its subsidiary Dalian Software Park Ltd has established joint ventures with Singaporean real estate developer Ascendas Pte Ltd and Hong Kong's Shui On Group to build the second phase of the Dalian park.
The whole project is expected to involve a total investment of 15 billion yuan and will be able to accommodate more than 200,000 developers - the largest of its kind in China.
Yida Group is now building software parks in Dalian, Suzhou, Tianjin and Wuhan, with a total construction area of 8.2 millionsqm.
"Despite the government's latest move to tighten foreign investment in the property sector, there shouldn't be much of an obstacle for us," said Sun. "Software parks are considered important infrastructure for the service outsourcing sector."
Equity Office, once the largest publicly held office building owner in the US, was acquired by private equity firm Blackstone in February. The $39 billion deal was the biggest leveraged buyout in US history. But the publicly traded private equity firm, in which China's State investment arm has a 10 percent stake, had sold 70 percent of the office space held by Equity Office by July, according to the Wall Street Journal.
Local media reported earlier that the US company had visited Shanghai looking for opportunities in the city.
China has being stepping up efforts to cultivate its outsourcing industry, trying to repeat the success story of neighboring India. The central government has selected 11 cities, including Dalian, Shanghai and Beijing, for pilot projects, with a raft of incentives to boost the growth of local outsourcing industries.
"Such enthusiasm will require a lot of investment in infrastructure, which opens up great opportunities for us," said Sun.
(China Daily 09/08/2007 page9)
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