Burned by Evergrande losses, Hong Kong tycoon offers to take developer Chinese Estates private for US$245 million

Joseph Lau’s family offers HK$4 apiece to public investors in Hong Kong-listed developer at an 83.5 per cent premium to last-traded price

Developer says steep losses arising from the sale of Evergrande shares had weakened its fundamentals

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The Chinese Estates Holdings office in Hong Kong. The company’s average disposal price for China Evergrande shares in August and September represents an 86 per cent discount on its average purchase price. Photo: Bloomberg

Published: 10:07pm, 6 Oct 2021Updated: 7:56am, 7 Oct 2021

Corrected [7:55am, 7 Oct, 2021]

[7:55am, 7 Oct, 2021]
Corrects name of founder in fourth paragraph

The family of Hong Kong magnate Joseph Lau Luen-hung is planning to take Chinese Estates Holdings private and on Wednesday offered an 83.5 per cent premium for shares held by minority owners.

The family is offering HK$4 apiece to public investors in the Hong Kong-listed company, whose stock closed at HK$2.18 on September 28, the last trading day before it was suspended, according to a stock exchange filing. It will shell out a combined HK$1.9 billion (US$245 million) for the shares.

Lau’s family currently controls about 78.6 per cent of Chinese Estates and, based on its offer price, values the company at HK$7.63 billion.

The purchase offer comes after Chinese Estates incurred steep losses from selling its shares in debt-ridden China Evergrande Group, whose founder Hui Ka-yan is desperately trying to avert a default and save his Shenzhen-based flagship from collapsing under more than US$300 billion of liabilities.

Chinese Estates said on Wednesday that the losses arising from the sale of Evergrande shares had exacerbated its fundamentals. Chinese Estates lost HK$1.38 billion after dumping 108.9 million shares in the Chinese developer in the open market between August 30 and September 21, according to the filing.

The family of Joseph Lau Luen-hung (right) controls about 78.6 per cent of Chinese Estates. Photo: Felix Wong

Chinese Estates sold the Evergrande shares in the open market for HK$246.5 million, or HK$2.26 each on average. The Evergrande stock was changing hands at HK$3.42 on average during that period, according to Bloomberg data.