Shanghai Pudong Development Bank recently issued a US$40 million private equity acquisition loan to Hony Capital. This was not only the first PE acquisition loan project within the China (Shanghai) Pilot Free Trade Zone, but also the first such case in China’s commercial banking industry.  

This loan is SPDB’s breakthrough in becoming “a comprehensive financial services provider for the private equity industry.” SPDB made full use of the innovative financial policies in the Shanghai Free Trade Zone to cooperate with Hony Capital, which is a leading private equity firm in China with about US$7.0 billion in assets under management. 

Hony Capital’s $1.508 billion RMB strategic investment in Shanghai Jin Jiang International Hotels Development Co. is also a breakthrough for the city of Shanghai in its state-owned asset reform efforts. This is the third project which Hony has participated in following Shanghai’s SOE reforms to permit more private ownership. The previous two are SMG Pictures (2013) and Shanghai Chengtou Holding Co., Ltd. (2014). 

Thanks to SPDB’s strategic decision to develop its investment banking business in securities, debts and loans simultaneously, SPDB won this acquisition loan deal and offered Hony Capital with a customized fund-raising solution with an innovative product design. This deal is also a breakthrough in domestic banking financial services with respect to leveraged buyouts. Besides SPDB, Bank of China and Bank of Shanghai also participated in this acquisition loan project. 

AllBright represented SPDB on the project. The team, consisting of partner Julia Zhu and associates Zhong Yang and Ted Hu, advised the lender on designing the deal structure, transaction document drafting, negotiating, and issuing legal opinions.