Banking giant Union Bank of Switzerland (UBS) did not proceed with the $4.4 billion deal with Dalian Wanda Commercial Properties.

UBS pulled out from the deal reportedly because of its concerns on credit risk from the privatisation of Wanda’s commercial properties as well as being uncomfortable with the structure of the transaction, South China Morning Post reported. 

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Originally, UBS has proposed the buy-back of Wanda’s Hong Kong-listed shares during the time when Chinese companies were shifting to higher valuations on mainland exchanges.

However, the Swiss banking institution eventually decided to cut the deal and the potential fees associated with it. In addition, Wanda’s deal was turned down by at least one other leading international bank.

“[The] privatisation process is very complicated,” said Carol Wu, the head of China and Hong Kong research at DBS Vickers.

Wanda returned its transaction with mainland investment bank China International Capital Corp (CICC) and later on handled the transaction for the company, completing the deal in September after a series of negotiations with the company’s now former shareholders and offers to private investors subscribing to the privatisation scheme.

The Chinese multinational conglomerate assured share buy-back participants that the company would reimburse returns at least 12 percent in the condition that Wanda failed to get a mainland listing within two years of de-listing from the Hong Kong exchange.

Meanwhile, Wanda noted that it is in the process of looking for a listing on the Shanghai exchange, but there are still no approvals from Chinese authorities to date, MingTiandi reported. 

Wanda is hoping that by shifting its listing from Hong Kong to Shanghai, the company can take advantage of the valuation premium granted to Chinese companies on their home exchanges.

TagsUBS, Wanda, Dalian Wanda, Union Bank of Switzerland, Wanda Privatization, Hong Kong, Mainland China, China International Capital Corp