PROPERTY Developer Sunac China Holdings plans to spend $9.3 billion (RM40 billion) on 76 hotels and a majority stake in 13 other projects from Chinese conglomerate Wanda, the two companies announced on Monday.

They gave little explanation for the deal, but Wanda is among companies that have been the target of official scrutiny into potentially risky loans stemming from a wave of overseas acquisitions by Chinese firms.

In May, reports surfaced that negotiations between Dalian Wanda Group, owned by Wang Jianlin, and the Malaysian government had reached advanced stages for Wanda to become the master developer of Bandar Malaysia, a huge tract of valuable land in the centre of Kuala Lumpur.

The deal is only awaiting the approval of Chinese authorities as the investment would involve large outflow of capital.

The Bandar Malaysia project is owned by 1Malaysia Development Bhd (1MDB) and the sale is part of deal to reduce its debts. 

Wanda, headed by one of China’s richest men, Wang Jianlin, had been one of the most acquisitive companies abroad, spending billions on a range of US entertainment properties.

But Beijing began last year to roll out measures to stanch the flood of cash overseas, fearing capital flight, a weakening currency and expressing concerns over “irrational” investments.

Last month, Wanda acknowledged that China’s banking regulator had ordered an inspection of potentially risky loans to it and other major Chinese companies that have invested heavily overseas.

Monday’s statement did not give details on the 76 hotels. 

But the companies said Sunac would take a 91% stake in 13 other “cultural and tourism projects” owned by Wanda, a commercial property developer that has diversified into entertainment, theme parks, and sports, partly as a buffer against Chinese real-estate volatility. 

The planned purchase is the latest aggressive move by fast-growing Sunac, which has struck a number of recent deals.

In January it invested US$2.2 billion (RM9.5 billion) in Chinese tech firm LeEco, which has acknowledged that it expanded too rapidly and was now facing a cash crunch.

Sunac, which is listed in Hong Kong, had suspended its shares ahead of the announcement.

Wanda Hotel Development, the group’s listed unit in Hong Kong, surged 94.83% to HK$1.13 by the break. – AFP, July 10, 2017.