Indebted developer China Evergrande gets approval to spin off property management business, raise fresh capital in Hong Kong
- Spin off could help Evergrande raise up to HK$40 billion, analyst says
- Company’s total debt amounted to 835.5 billion yuan as of June 30 this year
Indebted mainland property developer China Evergrande said on Friday it had received approval from the Hong Kong exchange to spin off its property management business, which would allow it to raise fresh capital.
The Shenzhen-based company, China’s biggest property developer, made the proposal on July 31 and will soon apply to list the business in Hong Kong, according to a filing with the exchange late on Friday.
The spin off could help Evergrande raise up to HK$40 billion (US$5.2 billion), according to Raymond Cheng, property analyst at CGS-CIMB Securities, including HK$24 billion from the sale of a 28 per cent stake in the property management business a month ago to 14 investors, and a potential HK$10 billion to HK$15 billion from the listing.
In a separate statement, the company said its operations remained stable and healthy, while its financial condition remained sound. It added that in the 24 years since its establishment, it had borrowed loans across 20,523 transactions and had never been late in repaying interest or principal.
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The company said on Thursday that the “documents and pictures are fabricated and are pure defamation”, but not before investors pulled out of its shares and bonds and that of its subsidiaries.