China’s property play

Greg Goodman, head of the wealthy Goodman family and the chief executive of listed property group Goodman Group is yet another entrepreneur fighting one of the toughest opponents of all – debt.

In mid-May, Goodman secured a deal with Macquarie Group to provide more than $300 million of short-term finance. A few days ago he signed off on a deal to get $200 million worth of short-term bridging finance from Chinese sovereign wealth fund China Investment Corporation.

A cashed-up CIC is on the hunt for investments all over the world, and Australia is a clear target. Not only do we have plenty of good mining assets going cheap, but there are also plenty of property assets available at very competitive prices.

Indeed, as analyst Richard Jones from JP Morgan suggested in a research note yesterday, one potential asset CIC may have its eyes on is Goodman Group itself.

The company’s share price has slumped from around 50c to 38c in the last week or so and Jones argues that if the stock gets too cheap, CIC might decide it can buy the whole company.

CIC apparently did extensive due diligence on Goodman Group before making its strategic investment. Goodman would like that due diligence to be seen as a vote of confidence in its future, but could it be the platform for a much bigger deal?