Tuesday, August 4, 2020
Martin Hennecke

Evergrande eyes US$2b property arm spinoff
China Evergrande (3333), the country's second-largest developer by sales, is planning to spin off its property management business in the mainland on the local bourse in the first half of next year to raise around US$1 billion (HK$7.8 billion) to US$2 billion, according to Reuters IFR. The report said Evergrande is working with Huatai Securities (6886), UBS Group, ABC International, CCB International, CLSA, and Haitong Securities on the potential flotation. Shares of Evergrande climbed 0.47 percent to HK$21.55 yesterday. The developer's property management segment saw revenue rise 7.6 percent to 4.38 billion yuan (HK$4.85 billion) in 2019, mainly due to the increase in area under management service, according to its annual report. China Evergrande will sell a bulk of its commercial properties in an effort to lower its debt ratio, Reuters reported earlier this month, citing a person with knowledge of the matter. Local media first reported Evergrande was selling around 200 properties, including office towers, shops, hotels, shopping malls, hospitals and convention centers across China. The sale comes as Evergrande, which has one of the biggest debt piles among developers in China, has vowed to reduce its debt ratio to ease investor concerns about how leveraged it is. Evergrande's total borrowings stood at 800 billion yuan at the end of 2019. Meanwhile, Wanda Hotel Development (0169), a subsidiary of mainland property giant Dalian Wanda Group, has agreed to sell its 90 percent stake in a Chicago property project for US$270 million to help cut debt, sending its shares surging 22.64 percent to HK$0.32 yesterday. In other IPO news, mainland retail group Wumei Holdings has picked Goldman Sachs, CLSA and CMB International for its Hong Kong initial public offering that could raise at least HK$10 billion, local media reported. Separately, Hangzhou Tigermed Consulting is set to price its Hong Kong IPO at the higher end of the indicative price range of HK$88 to HK$100. The Shenzhen-listed clinical research service provider has attracted at least HK$91 billion in retail order through margin financing, equivalent to 154 times oversubscription.

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