March 31, 2017 / 7:28 AM / 8 months ago

China Vanke falls under direct control of Shenzhen govt

HONG KONG, March 31 (Reuters) - China Vanke , the subject of a protracted corporate power tussle, has come under the direct control of the Shenzhen municipal government, according to a WeChat post by a local authority.

Vanke, China’s No. 2 homebuilder by sales, has been in crisis since late 2015 as financial conglomerate Baoneng Group built up a 25 percent stake to become its largest shareholder and sought to oust management.

To counter Baoneng, state-owned Shenzhen Metro Group, a key Vanke ally, bought a 15 percent holding and this month became its largest shareholder in terms of voting rights after a proxy agreement with Vanke’s third-biggest shareholder.

The Shenzhen body that oversees government-controlled enterprises said Vanke had become one of its newest members, according to the Wechat post seen by Reuters on Friday.

The developer had also attended a recent meeting to set targets on social responsibilities and role of state-owned enterprises in promoting Shenzhen’s growth, it added.

Asked to comment on whether it could be considered a state-owned enterprise, Vanke said on Friday it had always been ‘a mixed-ownership enterprise’ and would continue to be one.

Whether the more direct control by the Shenzhen government will cause Baoneng to back down remains to be seen. Some analysts believe it is still interested in gaining seats on Vanke’s board.

Baoneng and Shenzhen Metro did not respond to requests for comment.

The term of Vanke’s current board officially expired on March 27, although company rules allow the current board to serve until a new one is formed. The property developer said this week that no time frame to select a new board had been set as yet as various parties were discussing proposals. (Reporting by Clare Jim; Editing by Anne Marie Roantree and Edwina Gibbs)

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