China

Suning Commerce Group Invests RMB 20 Bln in Evergrande Real Estate

Summary:

  • Suning Commerce Group (002024.SZ) has invested RMB 20 billion in Evergrande Real Estate (3333.HK), as reported by Sina.
  • Six institutional investors have invested in the latest round of Evergrande Real Estate’s fund raising, totaling RMB 60 billion.

Why It Matters:

  • Evergrande Real Estate is listed on the Hong Kong stock exchange but due to high valuations in the mainland stock market, the company planned to conduct a reverse acquisition with Shenzhen Special Economic Zone Real Estate&Properties (000029.SZ) through its subsidiary Kailong Real Estate Co. Consequently, the company needs to restructure its China mainland entity and attract strategic investors.
  • Evergrande Real Estate has been promising net profits of RMB 30.8 billion and RMB 33.7 billion respectively for 2018 and 2019. However, during the latest round of financing, the company has increased its promised net profit for 2018 and 2019 to RMB 55 billion and RMB 60 billion respectively.  
  • Evergrande Real Estate’s plans to launch a mainland IPO involve state-owned enterprise issues and the timing is critical, especially considering the slowing down of the Chinese housing market.