Chinese Estates builds 5pc stake in Evergrande for US$1.04b since April

Hong Kong developer now the second-biggest shareholder in the mainland’s top house builder

PUBLISHED : Wednesday, 19 July, 2017, 10:09pm
UPDATED : Wednesday, 19 July, 2017, 10:56pm

Chinese Estates Holdings, controlled by Hong Kong property tycoon Joseph Lau Luen-hung’s wife Chan Hoi-wan, has accumulated about 5 per cent of China Evergrande Group since April on the open market, it confirmed in a filing on Wednesday, for a total of HK$8.1 billion (US$1.04 billion).

The Hong Kong developer is now the second-biggest shareholder in Evergrande, according to data compiled by Bloomberg.

Chinese Estates, through its wholly-owned subsidiaries, has acquired about 655.2 million shares in China’s largest property developer, according to the filing to Hong Kong stock exchange.

It did not specify the acquisition price of the shares over the period, but did express its optimism about Evergrande’s overall prospects.

Earlier this month, the Hong Kong developer said it would record a HK$2.3 billion gain from the sale of Shengjing Bank shares – which it bought from Evergrande last May – in the first half, and a HK$1.2 billion fair value gain from its stake in Evergrande.

Records from the Hong Kong exchange reveal that Fair Eagle Securities, a wholly-owned subsidiary of Chinese Estates, traded a high volume of Evergrande shares from mid to late May, capitalising on a sharp rally in the share price of the mainland’s top house builder.

By the market close on Wednesday, Evergrande shares reversed early declines after the statement and had risen 1.52 per cent to HK$16 per share in Hong Kong. The stock had slumped as much as 2.3 per cent in morning trading.

Overall, Evergrande shares have more than doubled from HK$7.2 on March 31, as the company claimed improved financial health by paying back all its perpetual bonds, amounting to 112.94 billion yuan (US$16.72 billion).

Earlier this month, Evergrande announced its first-half contracted sales soared 72 per cent from a year earlier to 244 billion yuan , representing 54 per cent of its annual sales target of 450 billion yuan.

Chinese Estates, meanwhile, also gained about 2.7 per cent to HK$11.52 on Wednesday.

Lau, who was sentenced in absentia to more than five years in jail for bribery by a Macau court in 2014, has a close business partnership with Evergrande chairman Hui Ka-yan.

It was a cornerstone investor in Evergrande’s Hong Kong initial public offering in 2009.

In 2015, Evergrande acquired the Mass Mutual Tower in Hong Kong’s Wanchai district from Chinese Estates for HK$12.5 billion, setting a new record for a Hong Kong office building.

An Evergrande unit agreed in May last year to sell Shengjing Bank Co shares to Chinese Estates for HK$6.9 billion to restore the lender’s public float.

In March, Lau announced a transfer of his 74.99 per cent shareholding with an estimated worth of HK$16.99 billion (US$2.17 billion) to his wife Chan Hoi-wan and son chairman Lau Ming-wai.