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China Evergrande ends four-year pursuit of Shenzhen rival, to repay some of US$19.7 billion raised from investors

  • China Evergrande terminates back-door listing plan for Hengda unit after several delays and controversies
  • Developer will repay some investors and retain most backers, averting a US$19.7 billion cash crunch in first quarter of next year

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Hui Ka-yan, chairman of China Evergrande and China’s third-richest billionaire. Photo: Simon Song
Yujing Liu
China Evergrande has ended a plan to engineer a back-door listing for its property development unit in Shenzhen, ending a costly four-year pursuit of one of its biggest rivals in the city.
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The developer, helmed by the country’s third-richest tycoon, Hui Ka-yan, has resolved to terminate the reorganisation plan with Shenzhen Special Economic Zone Real Estate & Properties Group (Shenzhen Real Estate), it said in a Hong Kong stock exchange filing on Sunday. It did not provide any reason for the decision.

The reorganisation, first mooted in October 2016, involved selling its unit Hengda Real Estate to Shenzhen Real Estate in exchange for equity control.

The deal had been dogged by several delays, controversies and concerns about Evergrande’s indebtedness, after regulators started imposing deleverage “red lines” in late August to prevent potential credit and financial shocks in the economy. It prompted the Shenzhen target to turn cold on the proposal.

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Hui has called on some 130 billion yuan (US$19.7 billion) of capital in the past four years from more than 30 business partners and companies to invest in Hengda by promising big dividends. The money was to be repaid by the end of March next year, should the reorganisation fail to proceed.

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