China

Evergrande Real Estate Acquires Additional RMB 4.2 Bln of China Vanke Stock

Summary:

  • Evergrande Real Estate (3333.HK) has revealed that it has acquired another RMB 4.2 billion worth of China Vanke’s (000002.SZ) stock between August 16 and November 9, according to Yicai.com.
  • Evergrande Real Estate’s stake in China Vanke has now increased to 8.285%. 

Why It Matters:

  • Evergrande Real Estate made the announcement after the market closed, but it appears the information had been leaked as China Vanke’s stock price rose significantly on November 9 and reached the 10% trading limit.
  • Caixin suggests that Evergrande Real Estate has privately made a deal with the Shenzhen government. The Shenzhen government will allow Evergrande Real Estate to conduct a reverse acquisition with ShenZhen Special Economic Zone Real Estate & Properties (000029.SZ) in exchange for transferring China Vanke shares to Shenzhen Metro.  The market remains uncertain regarding the motives behind Evergrande Real Estate’s actions.
  • China Vanke had planed to issue non-public shares to Shenzhen Metro in order to oppose the company’s current largest shareholder. However, the plan was rejected at a shareholder meeting.