Banking & Finance

The Midas men

China’s top two tycoons chase down Bill Gates in the riches race

Wang, chairman of Dalian Wanda Group, touches his face during an interview at his office in the company's headquarters in Beijing

Wang hopes to profit by shifting his listing from Hong Kong to Shanghai

Does the curse of being named as China’s richest man still apply? Traditionally many of the country’s tycoons have been wary of the title, fearing the scrutiny it brings. Other times the superlative can be shortlived, with the Midas touch evaporating almost overnight.

Just ask minority shareholders at Hanergy, the once-vaunted solar firm. Last February its boss Li Hejun was named by Hurun, one of several compilers of “rich lists”, as the wealthiest tycoon in China with an estimated worth of $26 billion.

But Li’s tenure at the top was fleeting (as many had predicted, see WiC270). Having risen more than 600% in a year, Hanergy stock plunged 47% in less than 30 minutes last May. The price seemed destined to dip much lower too until Hong Kong’s regulators pulled its shares from trading. They have been suspended ever since.

The Hanergy debacle hasn’t dimmed the enthusiasm of the rich list compilers from calculating the net worth of other tycoons. CBN, a newspaper backed by the Shanghai government and e-commerce giant Alibaba, announced its own rich list last week (aside from Hurun, other compilers include Bloomberg, Forbes and a domestic magazine called New Fortune). And CBN says that its own A-share Individual Rich List is the first to use “big data techniques” to rank net worth with real-time market prices.

Wang Jianlin of property conglomerate Dalian Wanda tops the CBN ranking with a net worth of Rmb58 billion ($8.9 billion). The He family – the founders of Guangdong’s white goods maker Midea – come second with Rmb50 billion. However, CBN’s numbers factor in assets in the A-share market – they don’t include international holdings or privately held assets – which is why it has also concluded that Wang could soon become the world’s richest man, surpassing the $75 billion fortune of Microsoft’s Bill Gates.

Currently Dalian Wanda’s two biggest listed units are Wanda Cinema Line and Wanda Commercial. The cinema business, which was floated in Shenzhen, operates 1,657 movie screens in China and has a market value of Rmb96 billion. Wang’s 60% stake is worth Rmb58 billion (as shown in CBN’s ranking).

The other listed unit is the biggest commercial landlord in China but has been trading at unattractive valuations since going public in Hong Kong in 2014. Wang is expected to take Wanda Commercial private, before refloating it in China (see WiC320). Citing company documents, CBN says that Wanda is hoping for a future valuation close to Rmb688 billion (or more than $100 billion, versus its current $30 billion market cap in Hong Kong). So if everything goes smoothly, Wang’s 63% stake will add $63 billion to his net worth.

“After adding up the value of the Wanda Group’s non-listed subsidiaries, operating in areas such as entertainment, sports, finance and department stores, it is entirely possible that Wang could become the world’s richest person,” CBN believes.

All of this is based on the assumption that an A-share IPO will deliver a top-notch valuation for Wanda’s property division.

But for the time being, he may not even be the richest man in China, it seems. According to Bloomberg’s ranking, Alibaba’s chairman Jack Ma overtook Wang last week as Asia’s richest man after Alibaba’s financial affiliate raised a record amount in its latest fundraising round.

Ant Financial, which operates Alipay, China’s biggest online payment platform by transaction volume, and Yu’ebao, the largest money-market fund, closed a private fundraising at $4.5 billion, giving it a valuation of about $60 billion.

The new investors include the national social security fund and a series of state-owned insurers, Ant Financial said in a statement. Ma owns 6.3% of Alibaba and 37.9% of Ant Financial, Bloomberg reports. The two holdings add up to wealth of $33.3 billion, a whisker beyond Wang’s $32.7 billion and ahead too of Hong Kong tycoon Li Ka-shing’s $29.5 billion in the Bloomberg Billionaires Index.

Ma seems set to do even better, too. Reportedly Ant Financial is targeting a dual listing in Shanghai and Hong Kong, which would shape up as the largest IPO in China since Agricultural Bank of China sold $22 billion of shares in a 2010 offering.

Ma and Wang have swapped top spot in the rich lists with metronomic frequency, reports China Economic Journal. The battle is likely to continue. “While Ant Financial looks set to bypass Uber as the world’s most valuable privately-held tech firm, Wanda is also building a respectable cultural and sports business overseas,” the newspaper suggests, mentioning acquisitions like AMC Theatres in the US (this high-profile $2.6 billion purchase – made in 2012 – wasn’t injected into Wanda Cinema).

The rivalry between the two billionaires extends to a well-documented disagreement in 2012, when Wang wagered with Ma that online consumption wouldn’t surpass 50% of China’s total retail market by 2022.

If it does, Wang said he will pay the Alibaba chairman Rmb100 million. If not, Ma must cough up the same amount to him.

The media has built up the bet as a showdown between traditional retail (Wanda’s shopping malls) and the world of e-commerce (Alibaba’s Tmall and Taobao). In fact, both men have tried to play down the wager since it was first made. Fair enough – it’s not as if either of them really needs the money…

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