Evergrande’s Hong Kong ally boosts Chinese Estates shares with privatisation bid at 83 per cent premium

Chinese Estates’ stock surged 32 per cent, adding HK$1.77 billion in market value to the developer

Company intends to dump its remaining 4.4 per cent stake in Evergrande amid its liquidity woes, ending ties spanning 12 years

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The China Evergrande Centre in Wan Chai, Hong Kong. Photo: Edmond So

Published: 3:40pm, 7 Oct 2021Updated: 10:09pm, 7 Oct 2021

Chinese Estates Holdings soared after the family of Hong Kong tycoon Joseph Lau Luen-hung offered to take the property developer private, giving the stock a HK$1.76 billion (US$226 million) boost in market value.

The shares jumped 32 per cent to HK$3.82 at the close of trading on Thursday in one of their biggest rallies since a 60 per cent surge in June 2020. The gain added to a 2.8 per cent appreciation last month, halting a six-month rout partly associated with its soured investment in debt-laden China Evergrande Group.

Lau’s spouse Chan Hoi-wan offered to buy 25 per cent of the company from minority investors at HK$4 per share, or 83.5 per cent premium to its last-traded price before the privatisation announcement late Wednesday. The offer will cost HK$1.9 billion and value the entire company at HK$7.63 billion.

Lau and Chan currently control 75 per cent of Chinese Estates directly, through trusts held for their children and through other family members, according to the stock exchange filing.

Joseph Lau (second Left) and his wife Chan Hoi-wan leave China Evergrande Centre in Wan Chai, Hong Kong, in a March 2017 file picture. Photo: Edward Wong

The privatisation offer came two weeks after the group decided to dump all its interest in Evergrande as the Chinese home builder teeters on the brink of collapse under more than US$300 billion of liabilities. The decision could spell the end of business ties between the two tycoons forged over several large-scale transactions in the past 12 years.