Evergrande may be set to sell its property management unit in a bid to raise funds

By Michelle Toh, CNN Business

Shares in Evergrande were suspended on Monday amid reports that a rival Chinese property developer was preparing to buy its property management business – a move that could inject much-needed cash into the struggling conglomerate.

Cailian News, a Chinese state-run financial news outlet, reported on Monday that Hopson Development plans to take control of Evergrande’s property management arm by buying a roughly 51% stake in a deal that could worth more than HK$40 billion ($5.1 billion).

China’s state-run tabloid Global Times also covered the expected deal, referring to various “media reports” on the same day.

Shares of Evergrande and Hopson’s property management business were also suspended from trading in Hong Kong on Monday. In a stock filing, the Evergrande subsidiary cited “a possible general offer for the company’s shares,” while Hopson said in its own filing that an announcement was “pending” and would relate to a major acquisition. .

In one A separate statement to CNN Business, Hopson said he “would not comment on market rumours”, while reiterating he would make a “formal announcement”. The property developer bills itself as one of the largest in mainland China and is based in both Beijing and Guangzhou, according to its 2020 annual report. The company focuses on mid-to-high-end residential projects, according to its website for investors.

Evergrande did not immediately respond to a request for comment.

Evergrande is looking for buyers for some of its businesses as it struggles to survive a cash crunch. The conglomerate is China’s most indebted developer, with more than $300 billion in debt. He has has likely missed two bond payment deadlines in recent weeks, and its stock has crashed 80% so far this year.

Last month, the company revealed in a stock market filing that it had tried — and failed — to find bidders for parts of its property services and electric vehicle businesses, as well as its Hong Kong office tower.

Evergrande and its associates owned nearly 61% of Evergrande Property Services, the unit Hopson would buy, in May, according to a stock market filing.

Analysts were expecting a relatively calm news period this week as mainland China celebrates Golden Week, a major holiday. But markets are open in Hong Kong, where Evergrande shares and some of its bonds are traded.

Jeffrey Halley, senior market analyst for Asia-Pacific at Oanda, said in a note to clients on Monday that “there is still very little visibility from the Chinese government on the fate of Evergrande, although a slow and steady dismantling of the company seems to be the preferred course at the moment.

— CNN’s Beijing bureau contributed to this report.

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