AIA splurges 8.7b yuan in Shanghai real estate debut

Aiden He

AIA (1299) is set to invest a total of 8.7 billion yuan (HK$9.7 billion) in its first-ever real estate project in Shanghai.

The Asia-focused insurer's wholly-owned Chinese subsidiary has splashed out 4.61 billion yuan to acquire a 90 percent stake in a project company from units of Shanghai Industrial (0363), a Hong Kong based company mostly owned by the Shanghai government, according to the latter's filing yesterday.

The amount comprises 291.4 million yuan of equity interest and 4.32 billion yuan of shareholder's loan.

The insurer will also have to shoulder an additional loan of 422.4 million yuan the project company Shanghai Shisen owed to Sen Mansion, which used to own a 10 percent stake in Shanghai Shisen.

After the completion of the acquisition, Shanghai Industrial will hold the remaining 10 percent interest in Shisen through a subsidiary.

The project firm owns a plot on the north bund in Hongkou district for office and commercial use, which occupies an area of approximately 23,037 square meters and has a total gross floor area of approximately 230,568 sq m.

The project is a combination of office buildings, shopping malls, a theater, and the former residence of Nie Er, the composer of China's national anthem The March of the Volunteers, AIA's Chinese arm said in a statement.

It will continue to provide funding for the construction and subsequent operation of the project with a total investment of up to 8.7 billion yuan primarily from its statutory reserve, the statement said.

The deal is the largest asset acquisition made by the Chinese unit of AIA since its establishment, fully demonstrating the insurance company's confidence in the country, it added.

The structural topping out for buildings on the land has been completed. It is expected that the completion inspection and filing certificate can be obtained before the end of March next year, the filing showed.