China Evergrande to raise $12.34b from selling equity stake

Investors will acquire a 14.11% stake in Hengda Real Estate.

China Evergrande secured $70.67b (CNY60b) from investors that will acquire 14.11% of the enlarged equity of Hengda Real Estate in third round investment agreements.

According to OCBC Investment Research, the firm also said that the net profit of Hengda Real Estate will not be less than $58.88b (CNY50b) in 2018.

The initial 2018 and 2019 performance undertaking for the first two investment rounds were significantly lower at $36.25b (CNY30.8b) and $39.68b (CNY33.7b), respectively, and these have now been amended to be aligned with the higher levels in the third investment round.

OCBC analyst Joseph Ng said, "With this latest development, the net gearing level of Hengda Real Estate will drop as the group undergoes a strategic transition towards a more sustainable model of growth. The group will be convening an EGM to obtain shareholders’ approval for this third round of capital increase."