China Evergrande raises a further US$9 billion to cut debt ahead of Shenzhen listing
Consumer electronics chain Suning Electrical Appliances and state-backed Shandong Highway lead funding of company’s Hengda Real Estate unit
China Evergrande Group, the country’s largest property developer by sales, has raised a further 60 billion yuan (US$9 billion) from strategic investors as it looks to continue to reduce debt ahead of the listing of its property arm, Hengda Real Estate, on the Shenzhen Stock Exchange.
The latest funding, the third round this year, has brought the total amount the company has raised to 129.5 billion yuan through the sale of a total stake of 36.54 per cent of Hengda, according to a company statement on Monday.
Evergrande, which is based in the southern Guangdong province and listed in Hong Kong, has been planning to move Hengda to the Shenzhen exchange via a back-door listing since last October. Stocks on the Shenzhen bourse are trading at 27 times earnings, higher than the nine times on the Hang Seng China Enterprises Index.
“Both the scale of fundraising and the valuation are a bit over our expectations, which is positive for the company,” said Toni Ho, an analyst with Rhb Osk Securities Hong Kong.
Evergrande said that with the latest funding, its debt ratio could fall by a further 40 per cent from the 240 per cent at the time of its interim results in June.
The biggest investors in the fresh round were Suning Electrical Appliances Group, China’s largest consumer electronics chain, and state-backed Shandong Highway Group, which each invested 20 billion yuan.
