China’s Evergrande Group is considering a takeover bid for Australian real estate developer Lendlease, according to a source familiar with the matter.
China Evergrande Group EGRNF -6.10 percent’s $7 billion property-management business warned it might be the target of a buyout offer, which would bring in much-needed cash for its parent firm.
On Monday, Evergrande and its management arm, Evergrande Property Services Group Ltd., both had their shares suspended in Hong Kong. The suspension was put in place awaiting an announcement about “inside information and a potential general offer for the company’s shares,” according to the subsidiary.
Hopson Development Holdings Ltd. 754 1.65% said its shares were stopped Monday awaiting an announcement regarding a deal involving a Hong Kong-listed target company, which it did not identify.
Evergrande has defaulted on payments to international bondholders. It has tried to raise money by selling assets outside than its main development business, such as interests in its property management and electric car businesses, as well as a Hong Kong office complex.
Property management has become a booming sector in China, with several of the country’s major developers obtaining separate stock-market listings for these companies, which manage apartment complexes and provide services like child care, groceries, and maintenance to tenants.
According to FactSet, Evergrande’s subsidiary, which debuted on the Hong Kong stock exchange in December 2020, has a market value of $7.1 billion. The unit’s first public offering and a previous sale of shares to pre-IPO investors generated approximately HK$37.5 billion, or $4.8 billion, for the parent firm. According to records, Evergrande owned almost 61 percent of the company as of May.
Evergrande did not reply to a request for comment right away. Hopson’s Hong Kong and mainland offices did not respond to calls. Following its National Day on Friday, mainland China will be on vacation for a week.
Listed in Hong Kong Chu Mang Yee, a former local government official on the mainland who cofounded Hopson in 1992, owns the bulk of the company. Last year, his daughter, Chu Kut Yung, took over as chairman.
For the first six months of this year, the firm recorded sales of approximately $2.1 billion, which is much less than Evergrande. Property management was responsible for around 7% of the total. Hopson’s assets are mostly in southern Chinese coastal cities like Shenzhen and Guangzhou, the Yangtze River Delta, including Shanghai and Hangzhou, and the Beijing-Tianjin economic area.
Evergrande agreed to sell a near-20 percent interest in Shengjing Bank Co., a commercial bank it partly controls, to a Chinese state-owned company for approximately $1.5 billion last week. According to a document, Shengjing Bank has requested that Evergrande utilize the net profits from the share sale to reimburse what the developer owes it.
China Evergrande New Energy Vehicle Group Ltd., another publicly traded Evergrande subsidiary, is facing its own financial difficulties. The EV company warned late last month that it was experiencing a “severe lack of cash” and may be unable to fulfill its financial commitments.
Evergrande Group of China: Stalled Construction and Huge Debts
—This paper was co-written by P.R. Venkat.
Elaine Yu can be reached at [email protected]
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