Is the alliance between Zhang Lei and Dong Mingzhu changing behind Hillhouse's reduction of Gree Electric Appliances?

After six years of investment, Gao Ling plans to make its first reduction of Gree Electric Appliances shares.

On the evening of February 25, Gree Electric announced that its largest shareholder, Zhuhai Mingjun Investment Partnership Enterprise (Limited) (referred to as “Zhuhai Mingjun”), intends to reduce its holdings by no more than 112 million shares. The proceeds will be used to repay bank loans. Based on Gree Electric’s latest closing price of 37.59 yuan per share, this portion of shares is valued at approximately 4.21 billion yuan.

It is noteworthy that behind Zhuhai Mingjun is Gao Ling Capital, and its relationship with Gree Electric can be traced back to 2019. At that time, Zhuhai Mingjun acquired 15% of Gree Electric held by Gree Group at a price of 46.17 yuan per share, with a total transaction amount of up to 41.662 billion yuan. Along with the large investment, Gao Ling also made commitments not to reduce holdings or interfere with daily operations within three years, and to promote management stock incentives, forming a “alliance” with Dong Mingzhu through a joint action relationship.

In the years since Gao Ling’s investment, under Dong Mingzhu’s leadership, Gree Electric once showed significant growth, but in recent years, the company’s performance growth has slowed, and its diversified reforms, which were once bold, have seen limited results. The company still relies heavily on its core air conditioning business.

In this context, Zhuhai Mingjun once experienced a paper loss of over 100 billion yuan. Even considering the dividends received in recent years, after accounting for loan costs, Gao Ling’s investment in Gree Electric may not have yielded ideal gains. Meanwhile, Dong Mingzhu is now 72 years old, still active in management, but discussions about her retirement have been ongoing in recent years.

Gao Ling’s First Reduction of Gree Electric Shares

Gao Ling reduces its holdings in Gree Electric.

On the evening of February 25, Gree Electric announced that its largest shareholder, Zhuhai Mingjun, plans to reduce its holdings by no more than 112 million shares (not exceeding 2% of the company’s total share capital after excluding shares held in the buyback account) through block trading within three months after the disclosure date. The proceeds will be used to repay bank loans.

Following this news, Gree Electric’s stock price fell sharply, closing down 2.34% at 37.59 yuan per share on February 26, with a market value of 210.6 billion yuan. Based on the latest share price, the shares Zhuhai Mingjun plans to reduce are worth about 4.21 billion yuan.

The announcement shows that Zhuhai Mingjun currently holds 902 million shares, accounting for 16.11% of the total share capital, making it the largest shareholder. After the reduction, Zhuhai Mingjun will still remain the largest shareholder, with no change in control of the company.

It is also noteworthy that behind Zhuhai Mingjun is Gao Ling Capital, which acts in concert with Dong Mingzhu, the chairman of Gree Electric. Their relationship dates back six years.

In 2019, Gree Electric launched mixed-ownership reform, and Zhuhai Mingjun acquired 15% of Gree Electric held by Gree Group at 46.17 yuan per share, with a total transaction of 41.662 billion yuan. After the transaction was completed in 2020, Zhuhai Mingjun became the largest shareholder of Gree Electric.

According to the announcement at that time, of the over 40 billion yuan involved, Zhuhai Mingjun used 21.85 billion yuan of its own funds, with the rest obtained through loan agreements with seven banks. In April 2021, Zhuhai Mingjun signed new loan agreements to repay these bank loans and pledged its holdings of Gree Electric shares. Currently, all of Zhuhai Mingjun’s Gree Electric shares remain fully pledged.

It can be said that Gao Ling invested heavily to enter Gree Electric, making multiple commitments, including: not reducing holdings within three years, not interfering with management, promoting stock incentive plans, and forming a “concerted action” relationship with Dong Mingzhu.

In this situation, although Gao Ling is the sole largest shareholder of Gree Electric, it only has the right to nominate one non-independent director on the board, subject to Dong Mingzhu’s approval; the Dong Mingzhu faction holds five seats on the board and controls the actual decision-making power.

From Gao Ling’s actions, it’s clear that it once held a very optimistic view of Gree Electric. Why, after six years, does it now propose to reduce its holdings?

“Alliance” Relationship Shows Fractures

Gao Ling has long coveted Gree Electric. According to Choice data, in the first quarter of 2016, Gao Ling HCM China Fund first appeared among Gree Electric’s top ten circulating shareholders.

As the founder of Gao Ling Capital, Zhang Lei is a prominent figure in the investment circle. After graduating from university, he served as the chief China representative at NYSE and established the NYSE offices in Hong Kong and Beijing. In 2005, he returned to China to found Gao Ling Capital. Zhang Lei insists on being a “long-termist,” emphasizing to be a “friend of time.” He has invested in well-known companies like JD.com, Tencent, Belle, WuXi AppTec, and others, earning substantial profits. However, his investment in Gree Electric may not have been very profitable.

After Dong Mingzhu and Zhang Lei formed an alliance, Gree Electric’s overall performance showed an upward trend but with frequent fluctuations, especially in recent years, with slow growth. From 2022 to 2024, the company’s revenue was 190.151 billion, 205.018 billion, and 190.038 billion yuan respectively; net profit attributable to parent was 24.597 billion, 29.017 billion, and 32.185 billion yuan.

In the first three quarters of 2025, revenue was 137.654 billion yuan, down 6.62% year-on-year; net profit was 21.461 billion yuan, down 2.27% year-on-year, with both revenue and net profit declining.

While performance has been unstable, Gree Electric’s stock price has also fluctuated. According to Tonghuashun, during the low point in 2022, Zhuhai Mingjun’s paper gains once exceeded 100 billion yuan. Currently, with the stock price at 37.59 yuan, compared to the initial 46.17 yuan, there is still a gap.

However, Gree Electric has always been generous with dividends. According to incomplete statistics, since 2020, Gree Electric has paid out about 86 billion yuan in dividends, with Zhuhai Mingjun receiving about 13.8 billion yuan. Based on the latest stock price, Zhuhai Mingjun’s 902 million shares are worth approximately 339.06 billion yuan. In total, including recent dividends, the paper gains on Gao Ling’s investment in Gree Electric are about 6 billion yuan.

But when Zhuhai Mingjun invested, it borrowed over 20 billion yuan. Considering interest and other factors, Gao Ling’s six-year investment in Gree Electric may not have achieved the expected gains.

Does this reduction now indicate a rift between Zhang Lei and Dong Mingzhu’s previous “alliance”?

How Much Longer Can Dong Mingzhu “Hold”?

When talking about Gree Electric, the unavoidable focus is on the company’s leader—“Iron Lady” Dong Mingzhu.

In 2012, Dong Mingzhu took over from Zhu Jianghong and began leading Gree Electric. The next year, she proposed the “1 billion bet” with Lei Jun, which drew widespread attention.

Undeniably, under Dong Mingzhu’s leadership, Gree Electric’s reputation and performance advanced significantly. However, in recent years, the company’s growth seems to have hit a bottleneck, and controversies surrounding Dong Mingzhu have continued to emerge.

In April 2025, at the temporary shareholders’ meeting, Dong Mingzhu was elected as the chair of the 13th board of directors, beginning her fifth three-year term. Public information shows she was born in 1954, making her 72 years old. Under these circumstances, there are ongoing rumors about her retirement and succession plans.

However, while Dong Mingzhu was re-elected as chair, she quietly resigned from the position of president and has since stepped down from several subsidiary roles, including her resignation in August 2025 from the director position at Gree Titanium New Energy Co., Ltd. In January 2026, she also resigned as legal representative and executive director of Zhuhai Gree Electronics Components Co., Ltd. This has led to speculation that she is gradually relinquishing power.

Nevertheless, Gree Electric still faces many challenges.

These include ongoing diversification efforts, such as attempting to make phones, acquiring Gree Titanium for new energy, and investing in companies like Winhai Technology, Sanan Optoelectronics, and DunAn Environmental. However, these diversification strategies have been somewhat lackluster, and investments in companies like Winhai and Gree Titanium have previously impacted the company’s stock price and performance.

From a business structure perspective, Gree Electric’s performance remains heavily reliant on air conditioning products. The 2024 annual report did not disclose separate figures for air conditioning, but in 2023, revenue from Gree air conditioners was 151.217 billion yuan, accounting for 73.76% of total revenue.

Additionally, Gree Electric faces pressure from competitors. Its current market value has fallen behind Midea and Haier, and Xiaomi, which lost the “1 billion bet,” has recently surpassed Gree.

With multiple pressures mounting, can 72-year-old Dong Mingzhu still lead Gree Electric back to its peak?