A Study On The Motivation And Performance Of Equity Carve-out Of Poly Property

With the rapid development of the capital market,plenty of enterprises is trying to create more value for themselves by means of capital operation.After experiencing scale expansion,reorganization and mergers and acquisitions,various diversified group enterprises have emerged.However,some enterprises’ business models have negative synergistic effects due to the deepening diversification.And in order to reduce or even eliminate this effect,equity carve-outs are on the rise.Equity carve-outs are shrinking capital operation methods whereby a diversified group of companies can improve the efficiency of internal resource allocation and unlock the full market value of the divested subsidiaries,thus achieving rapid growth through the capital market.At present,with the changes in the domestic economic environment and the reform of real estate market policies,the profit level of the Chinese real estate industry has been declining.At the same time,promoted by the huge stock market of the real estate industry,the property management industry has excellent development prospects.However,for a long time,the property management industry has been in a relatively marginal position in the value chain of the real estate industry,which undoubtedly restricts the development of the entire industry.Therefore,property management companies can achieve better development through equity carve-outs.Since 2014,when Colour Life was carved out from Fancy Life Holdings and successfully listed in Hong Kong,large real estate groups have started to carve out their property segments to be listed in the capital market.Poly Property,one of the typical representatives,has successfully spun off from its parent company Poly Development and been listed independently in 2019.Through the case study of Poly Property’s equity carve-out,the research can bring some significant reference to other companies in the industry that have the intention of equity carve-outs.This research presents a case study of Poly Property’s equity carve-out through the literature research method,case study method and event study method.The research starts from the background and significance of the equity carve-outs and summarizes the relevant concepts and theories after studying the relevant domestic and foreign literature,so as to lay the theoretical foundation for the main part of the case study.Secondly,the introduction of the case study explores the development status of the property management industry and describes the specific process of the equity carve-out of Poly Property.Based on the relevant theories of equity carve-outs,after providing a comprehensive analysis of the motivation of equity carve-out of Poly Property.Additionally,it presents a comprehensive analysis of the performance status of Poly Property before and after its equity carve-out through three aspects:capital market reaction,financial and non-financial indicators.Finally,on the basis of the case study,the research draws conclusions on the equity carve-out of Poly Property and provides some recommendations on the equity carve-outs of property management companies in light of the characteristics of the industry.The study hopes to enrich the existing literature and theories on equity carve-outs with the analysis of the case study of the equity carve-out of Poly Property and to provide experience and reference for other property management companies.