China property

Chinese developer Kaisa soars 26pc as Hong Kong tycoon Lau’s family investment boosts confidence

PUBLISHED : Thursday, 21 September, 2017, 2:40pm
UPDATED : Thursday, 21 September, 2017, 9:31pm

Shares of Chinese property developer Kaisa Group soared 26 per cent on Thursday morning after it was revealed that tycoon Joseph Lau’s family has invested nearly US$1.2 billion in the company’s offshore debts.

Lau’s family, led by his wife Kimbie Chan Hoi-wan, along with their company, Chinese Estates, and several investment partners, have bought US$1.2 billion of Kaisa’s bonds, with the family itself accounting for over 90 per cent of the total, a Chinese Estates spokesman said in a statement on Wednesday night.

They bought US$600 million in bonds earlier this year, and the other half in the latest round of fundraising.

Shenzhen-based Kaisa said it raised US$805 million in three new bonds sales on Wednesday, mainly for refinancing purposes. That includes a US$95 million, 7.25 per cent bond due in 2020, a US$100 million, 8.5 per cent bond due in 2022 and a US$610 million, 9.375 per cent bond due in 2024.

The investment from Lau’s family is seen as a display of confidence in Kaisa – a company that was on the verge of bankruptcy in 2015 and the first Chinese property developer to default on an overseas bond.

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Kaisa’s shares surged to an all-time high of HK$6.6 on Thursday morning after Chinese Estates made their announcement.

“It is an ideal investment as we expect (Lau’s family and Chinese Estates) to pocket more than HK$870 million in interest payments every year,” Chinese Estates said.

Lau, Hong Kong’s fourth richest man, is known for making a fortune out of his investments in financial markets and real estate.

The veteran investor and his family have been bullish on mainland Chinese property firms this year and earned huge gains from their bet.

Chinese Estates confirmed that Lau’s family and Chinese Estates currently hold six to seven mainland developers’ financial products, including stocks and bonds.

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In March, Lau announced the transfer of his 74.99 per cent shareholding in Chinese Estates, estimated to be worth HK$16.99 billion (US$2.17 billion), to his wife Chan and son, chairman Lau Ming-wai. Chan, a former entertainment reporter, is now Chinese Estates’ controlling shareholder with a 50.02 per cent stake.

After taking the reins from Lau, she also emerged as an active investor in the financial markets.

Since April, Chinese Estates and Chan have between them bought 800 million shares, or 6.1 per cent, of China Evergrande, becoming its second largest shareholder. Evergrande is the biggest home builder in China by sales, and its shares have shot up 500 per cent so far this year.

Chinese Estates said when announcing its interim results that its share purchases in Evergrande had generated earnings of HK$1.2 billion as of the end of June.

In April, a consortium of Lau’s family members and investment partners, led by Chan, also bought US$1 billion of high-yielding bonds issued by Evergrande.