Evergrande Group raises $4.3-billion new capital for its China backdoor listing

HONG KONG — China Evergrande Group said it would sell 13.16% of the enlarged shares in a property subsidiary to eight investors for a total 30 billion yuan ($4.32 billion), as part of its Shenzhen backdoor listing plan.

Evergrande said in October it planned to inject almost all of its property assets, held by the subsidiary, into Shenzhen Special Economic Zone Real Estate & Properties (Shenzhen Real Estate). It said the deal may include a strategic investment of up to 30 billion yuan.

A mainland backdoor listing would boost Evergrande’s valuation, with the developer targeting a market value for the listed property vehicle of $33.7 billion, and make it easier for heavily indebted Evergrande to raise funds.

“The capital increase will serve to raise funds as well as to allow the group to maintain the public float of Shenzhen Real Estate upon completion of the proposed reorganization,” Evergrande said in a statement on Monday.

Shares of the developer gained over 4% on Tuesday morning, outperforming a 0.5% gain in the broader market.

Evergrande’s shareholding in its property unit Hengda Real Estate Group Co. Ltd would be diluted to 86.84% on completion of the capital injection, while the proceeds raised would be used to repay debt, for project developments and for general working capital.

The eight investors include CITIC Juheng ( Shenzhen) Investment Holdings LLP, Guangtian Investment Co Ltd and Shenzhen Huajian Holdings Co. Ltd, who would each invest 5 billion yuan for a 2.19% stake in Hengda, according to a filing to the Hong Kong bourse.

Shenzhen Zhongrong Dingxing Investment LLP, Shandong Highway Companies, Suzhou Industrial Park Ruican Investment LLP, Shenzhen Meitou Hi- tech Venture Capital Investment Co. Ltd, and Guangdong Weimei Mingzhu Investment Co. Ltd, will each invest 3 billion yuan for a 1.32% stake. —