China’s mega real estate consolidation explained

Author: Brian Yap | Published: 19 Aug 2016

China is on course to witnessing one of the country’s largest case of consolidation to date, but cross-border aspects of the transaction have posed a series of compliance challenges for the parties involved.

On March 14 CITIC Pacific and CITIC Corp announced the RMB31 billion ($4.6 billion) sale of a 100% equity interest in CITIC Real Estate, as well as the mainland residential property assets of CITIC Pacific, to Hong Kong-incorporated China Overseas Land & Investment (COLI).

But the regulatory aspects of the deal have presented challenges to the participating lawyers, as counsel to the fact that it is a sale of state-owned assets under the control of the Ministry of Finance (MoF).

"It requires the Ministry’s endorsement not just for the deal itself, but also for how much and at what price CITIC is allowed to sell and there are a set of rules that the sellers...