Evergrande wins new funding from investors
Evergrande Real Estate Group, the Guangzhou-based developer that scrapped a March initial public offering to raise up to HK$16.58 billion, has secured new funding from two of its pre-listing investors while a third - Temasek Holdings of Singapore - refused to chip in more capital, market sources said.
But negotiations between Evergrande and Temasek, which manages the Singapore government's direct investments, were ongoing, a source said.
In 2006, while preparing for a listing, Evergrande brought in three financial investors Deutsche Bank, Merrill Lynch and Temasek.
They gave the developer combined funding of US$400 million by accepting convertible bonds.
Under the original listing plan, the three investors could convert the bonds into a combined stake of as much as 12.6 per cent before the completion of the global offering, using the lowest valuation for pricing. At the highest valuation, the three could get a combined stake of about 10 per cent in Evergrande.
Sources said Deutsche Bank and Merrill had agreed and committed to boost their stake in the mainland developer to about 15 per cent in a second round of capital injections. 'That's the agreement we have,' a source said. 'However, discussions are still continuing with Temasek.' The new investment will work out to about a 15 per cent interest, although that is not a final number.
In another scenario, Deutsche Bank and Merrill also would assume the stake that Temasek would have taken if it had joined the new financing scheme, another source said, although that would not be the ideal solution.
A spokesman for Temasek said earlier that it was 'comfortable with' its current shareholding. In March, due to poor market sentiment as well as concerns over macro-tightening measures on the mainland, Evergrande failed to draw enough orders from either retail or institutional investors to complete its mega fund-raising exercise.
The listing was to have been the second-largest fund-raising exercise in Hong Kong and the third-largest in Asia this year.
A nationwide developer, Evergrande has been expanding its foothold in the mainland property market over the past two years. It has one of the largest land banks among major mainland property developers with a gross floor area of 45.8 million square metres, of which 30.5 million square metres have been approved for land-use rights certification.
For this year, it plans to spend 30 billion yuan to develop ongoing projects. Sources said it would need 42 billion yuan next year.
