Wang, the 57-year-old founder of Future Land Development Holdings Ltd., is being held in criminal custody by the Putuo branch of the Shanghai Public Security Bureau for "personal reasons,” the company said in an exchange filing late Wednesday, without elaborating. He will be replaced as company chairman by his son, according to the filing.
Calls to Future Land’s investor relations and media departments weren’t answered. An official at the Shanghai Public Security Bureau said he couldn’t immediately comment.
Police in Putuo said in a social media post on Wednesday that they were holding two individuals for suspected molestation of a minor. They identified one of the suspects as a 57-year-old with the surname Wang, from a province north of Shanghai. The police didn’t provide further details on the suspects’ identities.
Future Land’s shares and bonds tumbled on Thursday, extending record losses that were sparked by media reports of Wang’s detention. The company, which has a market value of about $5.4 billion, is a constituent of MSCI Inc.’s global indexes. S-Enjoy Service Group Co. and Seazen Holdings Co., two other real estate companies with links to Wang, also slumped.
Wang controls about 70% of Future Land, which is active in China’s Yangtze River Delta region. The Shanghai-based company, which owns more than 100 shopping malls in China, reported revenue of 54.8 billion yuan ($8 billion) in 2018.
Wang also has a majority stake in property-management company S-Enjoy Service, which recently changed its name from Xinchengyue Holdings Ltd. He was chairman of Shanghai-based Seazen until the company replaced him on Wednesday.
Wang’s fortune, valued at $6.6 billion before news of his detention broke, fell to $5 billion as of Wednesday, according to the Bloomberg Billionaires Index.
While investors will probably remain cautious in the near term, Wang’s detention is likely to have a small impact on Future Land’s operations and sales, JPMorgan Chase & Co. analysts wrote in a research report. They said a default is unlikely and that investors should consider buying the stock if it drops to HK$6.80. It was trading at HK$7.10 as of 10:17 a.m. in Hong Kong, down 12% on the day.
Future Land may face takeover attempts from rivals if Wang can’t resume his duties, said Charles Macgregor, Singapore-based head of Asia at Lucror Analytics Pte. "The potential loss of the chairman may have a significant impact on the company,” he said.
Shares of China Evergrande Group, a rival developer, climbed 4.6% in Hong Kong on Thursday. - Bloomberg
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