Bain exploring investment in Hong Kong’s New World: sources

Bain Capital is investigating a possible investment in Hong Kong's New World Development, as the real estate firm seeks methods to tackle its substantial debt, according to individuals familiar with the situation. Bain has been examining a potential deal that may involve the involvement of New World's controlling Cheng family in providing additional funds, one of the sources revealed.

The private equity company is still deliberating and there is no guarantee that a transaction will be pursued, the sources emphasized, requesting anonymity due to the sensitive nature of the information. New World's shares experienced erratic trading activity on Friday, concluding at HK$5.82 on the Hong Kong Stock Exchange. A Bain representative declined to comment, while New World and the Cheng family representatives did not provide any response to inquiries for comment.

New World, one of Hong Kong's pioneering property firms, manages a diverse portfolio of residential, office, and mall projects in the city and mainland China. Similar to many developers in the region, New World has been grappling with a protracted property slump, exacerbated by declining property prices, faltering consumer confidence, and an elevated interest rate setting.

This has adversely affected its revenues and escalated borrowing costs. The total debt of New World reached approximately HK$143 billion (US$18 billion) by the end of June, as disclosed in its latest results statement. A fraction of this debt is scheduled for repayment in 2028. These discussions follow prior unsuccessful endeavors by other international investors.

In May, Bloomberg News reported that Blackstone abandoned a US$4 billion partnership with New World after the Cheng family declined to relinquish control over the company. This week, New World disclosed that it is discontinuing a multibillion-dollar project with Hong Kong's Airport Authority, which analysts believe could heighten the prospects of an investor stepping in to offer financial backing to the company.

The business communicated to shareholders that it had recognized a HK$18.3 billion write-down following the cancellation of the 11 Skies retail and office complex, which served as a primary catalyst behind its third consecutive annual loss.