New | Zhao Wei’s takeover target says it’s under regulator’s scrutiny
Shares of Zhejiang People Culture plunge up to 10 per cent when trading resumes on Tuesday
Shares of Zhejiang People Culture Co., a Shanghai-listed animation studio and the takeover target of mainland actress Zhao Wei, fell by their daily limit of 10 per cent Tuesday, after the company admitted it’s under investigation by China’s regulatory watchdog for suspected flouting of securities regulations.
“Because your company is suspected of non-compliance with securities laws and regulations ... the CSRC has decided to open an investigation case [against] your company,” Zhejiang People said in a filing to the Shanghai Stock Exchange late Monday, quoting a circular by the China Securities Regulatory Commission.
The company said the watchdog has ordered it to strictly adhere to its disclosure obligations during the investigation.
Shares of Zhejiang People Culture resumed trading on Tuesday after a one-day suspension and opened 10 per cent lower at 15.18 yuan on the Shanghai Stock Exchange. It fell 8.6 per cent to 15.39 yuan by the mid-session close, with 755 million yuan (US$107 million) worth of shares changing hands.
The stock has plunged a combined 26 per cent in the past month.
Earlier this month Zhao, one of the wealthiest actresses in the world, suffered a major setback in her quest to profit from stock investments in China after local banks declined to extend credit lines to the celebrity for a 3 billion yuan (US$436 million) acquisition of Zhejiang People.
She has pocketed big gains from trading stocks in the mainland and Hong Kong.
Zhao, a 41-year-old former kindergarten teacher, shot to fame in the 1990s thanks to her hit drama My Fair Princess, which saw her rule the Chinese cinema screens for years.
But it was only in the past few years that her exploding fortune propelled her into the country’s ultra-wealthy club.
Jointly named by the Hurun Report as 35th on the list of richest billionaires under 40, Zhao and her husband Huang Youlong were estimated to have a net worth of US$1 billion, according to the ranking released in February last year.
Her Shanghai-listed firm Longwei Culture & Media said on February 16 that it had to abandon its bid for a controlling 29 per cent stake of Zhejiang People, after various banks it did not name turned down its request for financing.
An initial financing agreement reached with a bank in December last year was rejected by the lender’s head office on January 20, Longwei said at the time, without elaborating on the reasons.
The purchase could have been the largest equity investment by Zhao after she and her Singaporean husband made a HK$3.1 billion investment in Alibaba Pictures in 2014, which is controlled by Alibaba Group, the owner of the South China Morning Post.
