Chow Tai Fook Sells Itself to Shanghai State-owned Assets for 1.6 Billion
A few weeks ago, after the Hong Kong stock market closed, Chow Tai Fook Enterprises Group issued an announcement.
The content of the announcement is as follows: Its indirectly wholly - owned subsidiary, Chow Tai Fook Enterprises Investment Co., Ltd., has signed a share transfer agreement with two buyers to sell 100% of the equity of Hunan Chow Tai Fook Enterprises Highway Co., Ltd. The total consideration is approximately 1.61 billion RMB.
Who are the buyers?
The announcement states that Buyer A is Shanghai Infrastructure Construction and Development (Group) Co., Ltd., which will acquire 60% of the equity; Buyer B is Shanghai Urban Construction (Guangdong) Construction and Development Co., Ltd., which will acquire 40% of the equity. Looking through the equity structure, both buyers are ultimately controlled by the same entity - Tunnel Co., Ltd. (Shanghai Tunnel Engineering Co., Ltd.), which is under the actual control of the Shanghai State - owned Assets Supervision and Administration Commission.
This is the first A - share listed construction company in China's infrastructure sector. It was established in 1965 as the Shanghai Tunnel Engineering Company and listed on the main board of the Shanghai Stock Exchange in 1994. In the following decades, it has been deeply involved in the fields of urban infrastructure such as tunnels, rail transit, and roads and bridges.
Now, it has quietly extended its reach to a 72.4 - kilometer - long highway in Hunan.
This road is the Changsha - Liuyang Expressway, with two - way lanes and a franchise. It is operated by a specialized company established by Chow Tai Fook Enterprises Investment under the Cheng family in July 2019.
On paper, this is not an attractive asset. As of the end of June 2025, the pre - tax loss for the year was as high as 205 million RMB. The company has bank loans of approximately 2.11 billion RMB and shareholder loans of 212 million RMB, and the net asset value is only about 1.54 billion RMB. The seller finally sold it for 1.61 billion RMB, slightly higher than the 1.43 - billion - RMB value of 100% of the equity assessed by a third - party. However, it will record an after - tax loss of approximately 80 million RMB.
On paper, this is a loss - making deal.
However, Tunnel Co., Ltd. may be eyeing the potential value of this road when taking over.
Just last month when the acquisition news was announced, the publicly - offered REITs product initiated by Tunnel Co., Ltd., the Dongfanghong Tunnel Co., Ltd. Highway REIT, was officially listed on the Shanghai Stock Exchange. The offering scale was 4.68 billion RMB, and the underlying asset was the Qianjiang Tunnel in Zhejiang Province. The enthusiasm for subscribing to this product exceeded market expectations. The combined funds attracted from offline and public subscriptions exceeded 250 billion RMB, and the high over - subscription multiple was remarkable.
This means that Tunnel Co., Ltd. has established a path: injecting mature infrastructure assets into publicly - offered REITs and pushing them to the secondary market to achieve asset securitization. Under the traditional infrastructure investment model, it often takes more than 25 years for a highway project to fully recover the investment; with the REITs channel, this cycle can be compressed to 6 to 8 years. This is a fundamental transformation of the business model, evolving from a heavy - asset operator to a light - asset platform operator.
From this logic, the value of this highway in Hunan lies not in how much money it makes today, but in its future underlying assets.
For the Cheng family, getting this money has other more urgent uses.
A Negotiation with No Winners
Meanwhile, another piece of news about the Cheng family is brewing.
For nearly a year, New World Development has been engaged in a secret negotiation that has caught the attention of the entire Hong Kong business community with Blackstone, the world's largest alternative asset management company.
The core issue of the negotiation is only one: How much is Blackstone willing to pay to obtain how much control of New World Development?
Recently, Bloomberg quoted sources familiar with the matter to outline the negotiation: Blackstone plans to inject approximately $2.5 billion (about HK$19.5 billion) into an SPV company specially established for this transaction. At the same time, it requires the Cheng family to contribute $1 - 1.5 billion, forming a total capital scale of approximately $4 billion. In return, Blackstone demands to obtain the controlling stake in New World Development.
This condition is not difficult to understand from a business logic perspective. Blackstone is a world - class alternative asset management institution with a management scale of over one trillion US dollars. Its real - estate fund is one of the world's largest private - equity real - estate investment platforms. Facing a debt - ridden but asset - rich Hong Kong real - estate company, Blackstone's offer is quite generous, but the price is the controlling stake.
The negotiation lasted for nearly a year and was stuck at this hurdle.
The Cheng family finally refused.
This result may not be surprising, but the logic behind it is worth pondering. New World Development is not an ordinary listed company. It is a business empire built by Cheng Yu - tung with his lifelong efforts, the second - generation inheritance managed and expanded by Cheng Ka - shing, and the third - generation cause that Cheng Chi - kong has poured his personal will into and tried to redefine. For this family, giving up the controlling stake is not a financial decision but an announcement that this empire will no longer belong to the Cheng family.
So, Blackstone left. This potential $4 - billion deal came to an end.
After that, a spokesperson for New World Development said that the controlling shareholder, Chow Tai Fook Enterprises, has received inquiries from some potential investors, but no agreement has been reached with any party. There have been successive reports of several groups of potential acquirers: A consortium led by RRJ Capital and Ares Management is forming. RRJ proposes to acquire no more than 30% of New World's shares through a rights issue and only asks for a minority stake; Ares invites Asian sovereign wealth funds to participate but requires the Cheng family to pledge their shares as collateral. CapitaLand Investment from Singapore has also contacted New World, and the status of the negotiation is unknown.
Each group of potential investors has its own additional conditions, and each additional condition is testing how much the Cheng family is willing to give up.
A Heavy Financial Bill
The Cheng family certainly doesn't want to sell assets. But there is a bill that leaves no choice.
As of the end of December 2025, New World Development's net comprehensive debt was as high as HK$122.7 billion.
In the 2010s, the mainland real - estate market was booming, and Hong Kong tycoons rushed to increase their investments. Under the leadership of Cheng Chi - kong, New World Development not only deepened its involvement in the mainland's residential and commercial real - estate markets but also promoted a cultural and commercial complex strategy centered around K11 in Hong Kong. K11 is Cheng Chi - kong's personal brand, a carrier of his ambition to combine art and retail and redefine Hong Kong's commercial space. The total investment in this series of projects exceeded HK$10 billion, covering multiple cities such as Hong Kong, Shanghai, Guangzhou, and Wuhan. Each project is a long - term and capital - intensive bet.
These bets were visionary during the upward market period but became a burden during the downward market period.
Since 2021, the mainland real - estate market has taken a sharp turn for the worse, and many leading developers have successively faced liquidity crises. Although New World Development has not defaulted as severely as some mainland real - estate companies, the cash - back speed of its mainland business has slowed down significantly, the inventory of existing projects is under pressure to be sold, and the vacancy rate of office buildings in Hong Kong has continued to rise while retail consumption has been weak, further weakening the company's cash flow. At the same time, the huge debt - interest payments are like a regularly - running machine, consuming the company's quarterly profits precisely.
However, the debt has not disappeared but has only been postponed. What is really needed is a large - scale injection of equity funds to dilute the leverage and restructure the balance sheet.
There is also a more urgent deadline: New World Development must come up with a feasible debt - resolution plan before the end of the 2026 fiscal year (i.e., the end of June 2026). If it fails to satisfy the banks at that time, the banks have the right to re - examine and adjust the loan terms based on the latest balance sheet. Once this process starts, the initiative will shift from the Cheng family to the creditors, and the situation will become more passive.
In addition to the debt pressure of New World Development, another hot - potato project under its umbrella remains unresolved.
11SKIES, a super - large commercial complex in Kai Tak, Hong Kong, aiming to be the largest shopping mall in Asia, is burdened with approximately HK$70 billion in debt. New World is currently discussing with the Hong Kong Airport Authority whether to transfer the approximately HK$30 - billion - worth 11SKIES retail property to the airport authority for free in exchange for debt - restructuring space. This condition has become one of the prerequisites for some consortia to agree to invest.
In this context, selling the unprofitable highway in Hunan and recovering 1.6 billion RMB in cash is just one of the emergency liquidation actions. Larger actions are still waiting to be finalized at the negotiation table.
The Centennial Weight of a Family
All these debts, negotiations, and sales ultimately boil down to a more fundamental question: What does this family want to leave to the next generation?
Cheng Yu - tung is the starting point of the story.
Cheng Yu - tung was born in Shunde, Guangdong. He later became an apprentice in Chow Tai Fook Gold Shop and married the boss's daughter, thus laying the first cornerstone of the family's wealth. Relying on his precise control of the gold - purity standard and his strong intuition about the market rhythm, he turned a small jewelry shop into the most influential jewelry retail brand in China.
Beyond jewelry, Cheng Yu - tung saw the opportunity in the Hong Kong real - estate market early on. In the 1970s, he entered the real - estate field on a large scale and founded New World Development.
At that time, Hong Kong's economy was booming, and real - estate was the most certain tool for wealth appreciation. Cheng Yu - tung seized this opportunity and multiplied the family's asset scale. His business intuition lay in knowing when to enter and when to hold.
In 2016, Cheng Yu - tung passed away at the age of 91. He left behind a large - scale business system centered around Chow Tai Fook Jewelry and New World Development, spanning jewelry, real - estate, infrastructure, and retail, as well as a family name that is of great importance in the Hong Kong business community.
The second - generation successor is Cheng Ka - shing. As the eldest son of Cheng Yu - tung, he is calm and low - key in character, a typical conservative - style manager. During his tenure, the business scope of New World Development and Chow Tai Fook Enterprises continued to expand, but the overall style was to seek progress while maintaining stability and did not pursue aggressive expansion.
Cheng Ka - shing has also publicly expressed his values: He pursues a win - win situation and will not take all the profits when exiting an investment. In the eyes of the outside world, this is a rare business restraint and is also interpreted as the Cheng family's emphasis on long - term credibility.
However, it was Cheng Chi - kong, the third - generation member, who really brought the family into this debt storm.
Cheng Chi - kong is the son of Cheng Ka - shing. After taking over New World Development, he tried to reshape the image of this old - fashioned real - estate company with a more contemporary narrative: not just selling buildings but creating an urban lifestyle that integrates art, retail, and experience. K11 was thus born - this is Cheng Chi - kong's personal mark and an active departure from his father's conservative approach.
The concept itself is not wrong. The problem is that this narrative requires a huge amount of capital to support, and the rhythm of the times did not develop as expected. The sudden slowdown of the mainland real - estate market came earlier than anyone expected, and the recovery of Hong Kong's consumption was also slower than imagined. A large amount of pre - invested funds was locked in projects with long pay - back periods, while the clock of debt interest never stopped.
Three generations, three personalities, and three understandings of wealth and inheritance. Cheng Yu - tung was a pioneer, building an empire from scratch with intuition and courage; Cheng Ka - shing was a guardian, maintaining the family's reputation with stability and credibility; Cheng Chi - kong is a transformer, trying to rewrite the family's story with ideals and capital. History presents different questions to each generation, but in the face of the tests of the times, no one can only answer the questions they are good at.
A practical question is, will the Cheng family let go?
Transferring the controlling stake is costly in business, but for this family, it means something even more unacceptable - admitting that the real - estate dynasty built by their ancestors will no longer belong to the Cheng family.
Currently, the cash - flow engine of the family is still Chow Tai Fook Jewelry. This brand has been rooted in the mainland market for decades, with a store network covering cities large and small. In a market environment where the consumption of gold and jewelry remains resilient, it continues to contribute stable profits. To some extent, this forms a unique internal ecosystem of the Cheng family: making money from jewelry on one hand and resolving real - estate debts on the other. The dividends and profits from jewelry are the last implicit endorsement for New World Development in the capital market.
How long this endorsement can last depends on the results of the negotiations in the next few months.
Regardless of the final result, one thing has quietly happened - the wealth map of the Cheng family is undergoing the most profound restructuring in three generations. And in the history of the Hong Kong business community, there will be one more story about family, inheritance, and the times, which will be told over and over again.
This article is from the WeChat official account "Rongzhong Finance" (ID: thecapital), author: Abu, editor: Wuren, published by 36Kr with authorization.