China Evergrande raises HK$4.3b in slimmed-down share sale

[HONG KONG] China Evergrande Group, the country's most indebted property developer, on Wednesday said it has raised HK$4.3 billion in a slimmed-down share sale after initially targeting up to double that amount.

China's second-biggest developer by sales after Country Garden Holdings sold 260.65 million shares at HK$16.50 each, the low end of a price range flagged by its bankers in a term sheet when the deal launched on Tuesday.

The developer has been scrambling to raise cash as China's government tackles what it considers excessive borrowing in the real estate development sector with new debt-ratio caps.

Since August, the firm has taken steps including raising US$3 billion from selling a stake in a property management unit ahead of the unit's planned initial public offering, giving a 30 per cent discount on properties to boost sales, and reaching a deal with investors holding US$12.66 billion of another of its units to not ask Evergrande to repurchase their holdings.

The Hong Kong-listed company had planned to sell 490 million shares at HK$16.50 to HK$17.20 each, to raise US$1.04 billion to US$1.087 billion, the term sheet showed.

The set price was a 14.7 per cent discount to Evergrande's closing price on Monday of HK$19.34.

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Chairman Hui Ka Yan's interest in the company will fall to 70.32 per cent after completion of the subscription, from 71.72 per cent.

Evergrande said in a stock-exchange filing it would use the cash raised to help pay debt. It also said the sale could enhance its financial position and net asset base for long-term development and growth.

Market concern has mounted in recent weeks that Evergrande was headed for a cash crush if it could not get government approval for a backdoor listing in Shenzhen that has languished for four years.

REUTERS