May 22, 2014 / 10:56 AM / in 4 years

UPDATE 1-Tencent, Hony Capital win Shenzhen economic zone land auctions

* Tencent spends $249 mln on land at Shenzhen economic zone

* Legend Holdings’ equity arm Hony Capital pays $104 mln (Adds size of land, context)

HONG KONG, May 22 (Reuters) - Tencent Holdings Ltd and Hony Capital (Beijing) Co have bought land in a economic zone in Shenzhen, as the pilot project seeks high-profile names to attract investment.

Tencent paid 1.55 billion yuan ($248.65 million) for 190,000 square metres of Qianhai Bay, and Hony Capital paid 646 million yuan for half the size, an official at the Shenzhen Land and Real Estate Exchange Center told Reuters by telephone on Thursday.

Qianhai was widely touted as a potential “mini-Hong Kong” when established in 2010 targeting companies involved in information technology, logistics and finance.

At just an hour’s drive from Hong Kong, the project hoped the proximity to expertise in offshore yuan would attract financial institutions and encourage them to provide yuan-related services such as trade settlement.

But the project has struggled to attract big-name bidders to land auctions beyond property developers.

At the latest land sale on Thursday, Qianhai auctioned four sites totalling 582,000 square metres to IT-related and private equity bidders satisfying specific business and revenue criteria.

Tencent won the site reserved for a listed internet company with revenue above 40 billion yuan - criteria only China’s largest listed Internet company could meet, industry observers said.

Local electronics and e-commerce companies won the other two sites, bringing the auction’s total sales to 5.7 billion yuan, the official said.

Shenzhen-based Tencent declined to provide immediate comment auction. Private equity firm Hony Capital, whose parent Legend Holdings Corp is the controlling shareholder of the Lenovo Group Ltd, declined to comment.

$1 = 6.2337 Chinese Yuan Reporting by Clare Jim in HONG KONG and Paul Carsten in BEIJING; Editing by Anne Marie Roantree, Miral Fahmy and Christopher Cushing

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