Evergrande Property Gets Green Light for Hong Kong IPO

The property management unit of China Evergrande Group hopes to raise up to $3 billion.
Anthony RussoNov 12,2020,15:25

The property management unit of China Evergrande Group (OTC: EGRNF; HKEX: 03333) has won approval from the Stock Exchange of Hong Kong, taking it one step closer to IPO.

The company, known as Evergrande Property Services Group Ltd. (EPS), passed its listing hearing today, as reported by Bloomberg. The news outlet said last week that if the market conditions are favorable, EPS could raise as much as $3 billion.

EPS intends on using the proceeds to improve its technology, recruit talent, as well as for acquisitions and investments.

Meanwhile, China’s central bank and housing watchdog has required the nation’s largest developers including EPS to report their total debts, financing, and business data on the 15th of each month. According to the data, EPS reportedly has $120 billion in debt.

In addition, its parent has reportedly faced serious liquidity problems after buying land and a number of development projects during the pandemic. A leaked memo cited by Reuters in September stated that China Evergrande asked the government “for accelerated approval to float subsidiary Hengda Real Estate via a reverse merger.”

Although the company has called the rumor a fake, the memo said that China Evergrande could miss a January listing deadline and owe 144 billion yuan in payments to backers, assuming it does not get the approval. As of June, China Evergrande had 400 billion yuan in short-term debt.

Previously, S&P Global Ratings downgraded China Evergrande from “stable” to “negative,” citing its growing debt and liquidity problems.

A preliminary prospectus shows that China Evergrande owns roughly 72% of the property management unit.

Among the joint sponsors on the IPO are UBS Group AG ABC International, CCB International, Citic Securities Co., and Huatai International Ltd.

Topics:China Evergrande, Evergrande Property Services.