I am looking for Chinese buyer for land in newly opened Russian gambling zone in Far East. What would be a way to find one?

[rms]

So my friends in Russia want to sell a hotel and a piece of land in a newly opened gambling zone. They bought it beforehand and now want to sell higher. They speak little English and obviously no Chinese, so they are asking me to find buyer and organize the selling. 

What steps would you advice to contact as much interested people as possible? I was thinking of making a web page in English and Chinese, then putting ads on Chinese forums and may be emailing all real estate agents? 

Any other advice? Thanks

[ZhangKaiRong]

Is the hotel in operation right now? Is there a holding company settled as an owner or is the land and hotel owned by private individuals? If there is a company involve, then it is much more like an M&A process rather than a simple property sales. I would advise your friends to contact a professional consulting firm specialised in M&A, with experience in the hotel industry, because they tend to have good relationship with potential investor circles. I guess all the big4 companies in China and Russia have this kind of expertise, and there should be some boutique firms and smaller investment banks that are also good in this field. Of course they won't work for free, but the chance of finding a reasonable investor is higher than the method you suggested. Chinese investors are quite picky about operating investments (my personal experience), so they would require some kind of due diligence process on this hotel (a commercial due diligence or market study one if the hotel has not been put into operation, and a financial due diligence if it has been already operating) or a valuation prepared by an independent expert on order to address business risks.

[rms]

The property belongs to two persons. To buy it, Chinese will have to do some Russian based company as my friend explained to me. The hotel operates, it is a 2-3 star hotel for local Russians. From what I understood this place is interesting in view of future development  of this gambling zone that is just started. The price is $4 million.

 

I would imagine anybody have to do due diligence, and they would trust only their own consultants? 

 

What these "potential investor circles" would need? And how to get to them directly? I am not sure my friend wants to pay anything upfront. Probably commission 

[GotJack]

Wouldn't you know it! I have $4 million dollars and am looking to invest in Russian gambling opportunities that arise from a random post on a Chinese language learning forum. 

 

Where do I sign?

[rms]

I am not asking for money here, I am asking for strategy and some cultural details. Why not. Two Russian guys want to sell their hotel that they bought cheaper knowing price will go up once the gambling zone is opened. Where do you expect them to be inquiring? 

[ZhangKaiRong]

Well, I'm not familiar with Russian bhsiness law, but it is quite odd that the hotel is operating without a corporate legal entity background. How are the financials of the hotel handled then, who has to issue the financial statement of the operating hotel?

Normally in M&A transactions the seller has its own advisors who prepare the information memorandum, the vendor due diligence and valuation report and find investors interested. If there are interested parties they become bidders who receive either the information memorandum and the vendor due diligence report, and if they are not satisfied with the risks addressed there they can conduct a buy-side due diligence and valuation in order to have a basis for price and other SPA negotiations.

Potential investor circles in case of this hotel consist of private equity funds, real estate investment companies, mid-tier hotel chains and private investors. The problem is that the Chinese market is quite big and it will be hard to identify the reasonable potential buyers (even if you have a good understanding of the local market, it is still not easy), this is why I suggested to seek professional help, because these M&A firms most likely to have a pool of potential interested parties and have a direct contact to them due to previous cooperation. You can do the internet search for such potential investors but to be perfectly honest I have my doubt about whether they respond to an e-mail coming from a stranger about an investment opportunity. It's not even working in Europe, let alone in China, where guanxi is still a big influencer of business and investment decisions.

[ZhangKaiRong]

Another suggestion: LinkedIn has some groups related to investment and business opportunities in/with China. You can try to post this opportunity there and see what happens. Even though I have my doubts about the effectiveness, it still worth a trt, as it is free and fast.

[eslang]

Other than the English and Chinese webpages, you may like to consider the Mongolian and Korean language webpages too, because I have come across quite a number of them (i.e. the minority group in China) who can converse and read/write in 3 or more languages.

[roddy]

I'd be inclined to look at contacting immigration / investment lawyers in Russia - there's plenty of business done between China and the Russian Far East, you'll have much more success looking there than trying posting on Internet forums in China. Some leads might be investment fairs and the Russian Chamber of Commerce in Beijing (which seems to exist, but not have a functioning website as far as I can tell). 

[rms]

thanks everybody. I will work through all the info here.

I guess I will also use some guanxi that I have

[Simon_CH]

First of all, such information is never published in China. It's all done through contacts and relevant channels. The fact that you think about setting up a website shows that you don't have access to that information and these channels, so you'll have to talk to professionals who know how this business works and how to access potential buyers. 

 

If it's a gambling zone with other foreign investors your best bet is to simply get in contact with them when they're in the area. Most Chinese investors don't read emails or visit websites, you'd be surprised. 

 

Anyway, don't waste your time, talk to lots of people who know better and decide from there. 

[Floridaray]

I just remembered I read about the company SouFun has a website called Fang. I am sure that everyone who is saying you need to talk to a person with some guanxi is right but it might not hurt to have to have an online presence. If nothing else the specifics of what you are offering are in one place and if you are talking to people you will not have to send identical info. This might also be a good tool to open up doors to network. Possibly not directly to investors but to professionals it might be in their own interest.

 

I guess this is the area in the vicinity of Vladivostok. I would also look at companies in Macau that are involved in gambling operations. This is geographically separated enough that it is not competition but expansion. This is what they do as opposed to a normal investor. There is an article online about two groups summit ascent holdings and melco crown who invested. 

 

Just because its primarily chinese who might go there doesn't mean that North American or European investors might not be your people. They might not be in Shanghai or Macau but in Las Vegas.

 

I lived in Alaska for 3 years and my good friend was from Yuzno Sahalinsk. Good luck with everything.

 

Cheers

[Simon_CH]

There are new (and proposed) gambling  zones in many areas of the Far East and Siberia with China, few will succeed for anything but a few local Chinese who will go there for lack of another place to go.