Evergrande Nets USD4.35 Billion Strategic Investment to Pare Debt Ratio to 65%
Yicai Global
/SOURCE : Yicai
Evergrande Nets USD4.35 Billion Strategic Investment to Pare Debt Ratio to 65%

(Yicai Global) Jan. 3 -- China Evergrande Group Ltd. [HK:3333], the country's largest real estate developer by sales revenue, has substantially progressed in its efforts to lure strategic investment. Its net asset-to-liability ratio is expected to fall to 65 percent, and its assets-to-liabilities will also improve overall.

Parent company Evergrande Group said yesterday its affiliate Evergrande Properties Ltd. has signed capital injection agreements with eight strategic investors for a total of CNY30 billion (USD4.35 billion).

Upon completion of these cash infusions, the eight investors will hold 13 percent of the total equity in Evergrande Properties, while the shareholding by its former largest stakeholder, Guangzhou Kowloon Property Co., will drop to 87 percent.

Evergrande Group owns 100 percent of Guangzhou Kowloon Property, which formerly held 100 percent of Evergrande Properties' shares.

The debt ratio at Evergrande Properties will drop as a direct result of this deal, falling from 93 percent to the industry average of around 65 percent, estimates hold, based on the company's interim report for 2016.

Eight strategic investors came aboard in total, said Evergrande, and five have great financial strength.

The inclusion of strategic investors by Evergrande Properties stems from the asset reorganization deal between the company and Shenzhen Special Economic Zone Real Estate & Properties (Group) Co. [SZ:000029], a company listed on the A share market. The company said on Oct. 9 2016 it will acquire 100 percent of the equity in Evergrande Properties through an A share offering to re-float Evergrande Properties on the A share market.

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