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Bain Capital is considering a potential investment in Hong Kong property developer New World Development as the heavily indebted company explores options to strengthen its balance sheet, according to a report by Bloomberg citing unnamed people familiar with the matter.
The private equity firm has been examining a transaction that could involve a fresh capital injection from New World’s controlling Cheng family, the people said. Discussions remain ongoing and may not result in a deal.
New World shares moved sharply during trading in Hong Kong following reports of the discussions, initially recovering from earlier losses before trading lower later in the session.
A potential investment by Bain would come as New World seeks to navigate a prolonged downturn in Hong Kong’s property market and reduce its substantial debt burden. The developer has residential, office and retail assets across Hong Kong and mainland China, but has been hit by weaker property demand, subdued consumer spending and elevated borrowing costs.
New World reported total debt of about HKD143bn ($18bn) at the end of June, with part of that borrowing due to mature in 2028. The company has been pursuing asset sales and other measures to improve its financial position.
The discussions with Bain follow an earlier attempt by Blackstone to reach a deal with New World. Blackstone abandoned a proposed $4bn investment earlier this year after failing to agree with the Cheng family over control of the business.
New World this week also announced that it would withdraw from the multibillion-dollar 11 Skies project with Hong Kong’s Airport Authority. The decision resulted in an HKD18.3bn writedown and contributed to the developer reporting its third consecutive annual loss.
Representatives for Bain, New World and the Cheng family reportedly did not comment on the discussions.
Source: Private Equity Wire