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UPDATE 1-China's Dalian Wanda offers 12 pct return in take-private plan

(Adds more details)

HONG KONG, April 22 (Reuters) - Chinese billionaire Wang Jianlin is offering to pay investors up to 12 percent annual interest if his Dalian Wanda Group fails to re-list its Hong Kong quoted property arm in Shanghai within two years of taking it private, documents seen by Reuters show.

In a presentation document reviewed by Reuters, Dalian Wanda has given interested investors until Monday to pay a deposit as it seeks to raise fund to privatise Dalian Wanda Commercial Properties, China’s largest commercial developer.

Dalian Wanda, owned by China’s richest man Wang, is taking its Hong Kong unit private just 15 months after its stock market debut, unhappy with its share performance and preferring to place its bets on an upcoming Shanghai listing.

A source with knowledge on the fund-raising exercise, which is being done through special purpose vehicles, said Dalian Wanda’s offer has already been oversubscribed. Another source said most of the interest was from offshore Chinese funds.

Investors willing to participate must pay a 20 percent deposit by Monday.

“If the company fails to list in an onshore main board within two years of de-listing, or by August 31, 2018 (whichever later), Dalian Wanda Group will buy back all shares (of the special purpose vehicle) from offshore investors with 12 percent interest and onshore investors with 10 percent interest,” the document said.

Contacted by Reuters, Dalian Wanda declined to comment.

In the document, Dalian Wanda estimated the company would be valued at 9.6 times earnings in 2016 if listed on China’s domestic “A share” market, compared with 8.6 times on the “H share” market of Hong Kong-listed mainland firms.

“Wanda Commercial’s H shares are seriously undervalued, and have a rather large gap with price-to-earnings and price-to-book ratios of comparable companies in A shares,” the document said, adding that returning to a mainland exchange would offer investors “rather large room for arbitrage”.

Mainland-listed firms typically command higher valuations than those in Hong Kong, helped by a large pool of mainland retail investors. An index tracking dual-listed companies , shows mainland listings trade at an average 34 percent premium to the same company listed in Hong Kong.

Dalian Wanda Commercial Properties will offer no less than HK$48 per share to take the itself private, a level in line with its pricing for its IPO, which raised about $4 billion.

According to the document, Dalian Wanda will resort to an offshore syndication loan to fund the delisting if it does not raise enough capital from the special purpose vehicles. (Reporting by Clare Jim; Editing by Lisa Jucca and Alex Richardson)

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