China’s invisible tycoon centre stage in Wanda IPO

Wang Jianlin is China’s invisible tycoon. The founder of Dalian Wanda group will soon be the controlling shareholder of four listed companies spanning cinemas, real estate and hotels with shares that trade in China, Hong Kong and New York. Yet he is not on the board of any of them. What may look like good governance raises a different set of questions. Investors in Chinese companies are accustomed to founders with controlling stakes and enormous power. But Wang has no official role in Wanda’s commercial property division, which is planning to list a minority stake in Hong Kong, or in the upcoming offering of its mainland Chinese cinema business. He is also absent from U.S. cinema chain AMC Entertainment, which Wanda bought in 2012 and re-floated a year later, and from its Hong Kong-listed hotel unit. Wanda executives hold various board seats, including the chairman’s role at all four companies. Yet the tycoon’s lack of direct involvement is unusual. At first glance, it’s reassuring, because it looks as if he is distancing himself from the day-to-day running of the businesses. It may also reflect the fact that Wanda, with 178 real estate projects and around 500 cinemas as of September, has grown too big to be micro-managed by its founder. Yet Wang is hardly stepping back. He won’t be selling shares in Wanda Commercial Property, according to a person familiar with the situation. And the reality is that founders are influential insiders. Snagging land in China’s property market depends on connections. Wang will continue to trade between his companies too, as tenant, landlord and supplier. If his talks to buy Hollywood movie maker Lions Gate come to fruition, Wanda productions will be showing on AMC and Wanda Cinema Line’s big screens. Having board seats or a clear role wouldn’t remove scope for undue meddling, but would add transparency and accountability. The biggest unknown is Wang himself, ranked China’s second richest man by the Hurun Report. Chinese billionaires operate in a deeply political system, and anything that affects Wang’s personal reputation would swiftly be reflected in the share prices of his portfolio companies. Investors may be glad that he is taking a hands-off approach, but they shouldn’t pretend he doesn’t have a leading role. By John Foley The author is a Reuters Breakingviews columnist. The opinions expressed are his own.