Wang Shi, Chairman of China Vanke Co Ltd, speaks at a summit in Shenzhen city, South China's Guangdong province, March 25, 2014.[Photo/IC]

BEIJING - China's biggest residential developer China Vanke is worrying that its shareholders are buying too much stake.

Baoneng Group, a Shenzhen-based conglomerate with real estate and finance businesses, borrowed heavily to buy more than 22 percent of China Vanke, becoming its largest shareholder in a move that deeply worried Vanke's chairman Wang Shi.

"Our management does not welcome Baoneng as our biggest shareholder," said Wang in an internal meeting on Thursday. "The reason is simple, it just doesn't have enough credit."

Wang is concerned that Vanke's credit score will be lowered by Baoneng Group, thus adding to the company's borrowing cost.

A regulatory filing showed that Jushenghua, an affiliate of Baoneng Group, borrowed twice the amount of its cash to buy stake in Vanke.

"If the snowball keeps rolling, it will be just like what happened after the leverage buyout boom in the 1980s in the United States," said Wang, raising doubts on Baoneng Group's aggressive bet. "The consequences are just unimaginable."

In response, Baoneng said in a statement on Friday that the group has always abided by the law and has a good reputation in the market.

Baoneng Group overtook the State-owned China Resources to become Vanke's largest shareholder. If it accumulates more than a 30 percent stake in Vanke, it will become the controlling shareholder.

Vanke's share price has been rising sharply this month partly thanks to Baoneng's investment. The stock surged by the daily limit of 10 percent on Friday morning on the Shenzhen Stock Exchange, registering a 62-percent increase since the beginning of this month.