By
Chimamanda U. Martha
October 17th, 2023
According to a filing by Evergrande Group, the shares in the IPO would be priced at HK$8.5 to HK$9.75.
On the 23rd of November, China Evergrande Group (HKG: 3333) said that its property services unit plans to secure up to $2.04 billion in an initial public offering (IPO). According to a Reuters report, Evergrande Group may be planning to use the raised funds to improve cash flow at the company.
However, Bloomberg said that Evergrande Property Services plans to use 65% of the raised funds for acquisitions and expand its business. Bloomberg added that a part of the funds would also go into technology upgrades. Trading begins on the 2nd of December on the Hong Kong stock exchange.
Recently, the Hong Kong Financial market has been bubbling with new business from Chinese companies. Chinese companies are now getting involved in different Hong Kong sectors such as pharmaceuticals, tobacco, and property. In 2020, property management firms in China have raised about $4.59 billion through IPOs.
China Evergrande Property Services Unit Plans IPO
According to a filing, the offer shares in the IPO would be HK$8.5 to HK$9.75. The company hopes to conclude the share price on the 26th of November before trading begins on the 2nd of December. Reuters added that the property services unit may raise to HK$18.2 billion if it performs an over-allotment option.
Also, several financial institutions are joint sponsors of the listing. They include Huatai International Financial Holdings, UBS, ABC International, Haitong International, and CCB International. Furthermore, Reuters revealed that Evergrande Property Services had signed cornerstone investment agreements with 23 investors. Bloomberg highlighted two of the 23 investors. They include SenseTime Group and China Merchant Buyout Fund.
Evergrande has also signed supplemental agreements with most of the remaining strategic investors of Hengda Real Estate as the company battles with debt. As stated in Evergrande’s interim report published in September, the company has a total debt of $122.4 billion (835.5 billion yuan).
With the new agreement with strategic investors, China Evergrande Group noted that the investors would not demand their investment repayments. The investors have agreed to keep their funds worth 125.7 billion yuan as equity interests. In an announcement on the 22nd of November, the company added:
“Hengda Real Estate is a subsidiary of the Company. Upon entering into the series of agreements. Strategic investors hold a total of 40% equity interest in Hengda Real Estate. Kailong Real Estate holds 60% equity interest in Hengda Real Estate.”
According to South China Morning Post, Hong Kong Securities Association chairman Gordon Tsui said:
“Evergrande has spent a lot of effort to improve its cash position. The IPO, together with the arrangement with strategic investors of Hengda Real Estate will be positive to the future development of the company.”
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