(Yicai Global) March 31 -- China Vanke confirmed today that the real estate giant is considering setting up an asset management company to help some of the projects of troubled developer Tahoe Group.

Vanke President Zhu Jiusheng disclosed the Shenzhen-based firm’s thinking at an online earnings conference today. He said that if Tahoe’s problem can be properly resolved, it will benefit both home buyers and financial institutions. 

The disclosure followed speculation earlier this month that Vanke and Tahoe were planning to set up an asset management firm. The new venture would take charge of Tahoe projects’ start-up and sales, Zhu said, while adding that Vanke will not take on Tahoe’s debt.

Fujian province-based Tahoe has been short on cash since 2019 following a rapid expansion. Its overdue debt was nearing CNY4 billion (USD610.5 million) as of last August and several of its works in progress have been halted.

Vanke agreed to pay CNY2.4 billion in cash for a 19.9 percent stake in Tahoe last July. The preconditions required Tahoe to develop a debt restructuring plan to be approved by Vanke creditors. The deadline was Sept. 30, but some of the deal’s terms were not reached in time. Even so, Vanke was not planning to end the agreement, according to a statement from Tahoe.

Vanke released its annual report yesterday, showing solid growth last year. Revenue jumped almost 14 percent to CNY419.1 billion and net profit rose 6.8 percent to CNY41.5 billion.

The company’s stock price [SHE:000002] closed down 4.4 percent today at CNY30 (USD4.60), giving it a market cap of CNY348.5 billion. Tahoe Group [SHE:000732] closed up 1 percent to CNY3.10 for a market value of CNY7.6 billion.

Editor: Tom Litting