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Evergrande Group to sell its HengTen Network shares worth S$566.5 Mn

Evergrande Group to sell its HengTen Network shares worth S$566.5 Mn

Evergrande Group, China’s debt-ridden property developer, is reportedly set to sell stakes worth S$566.5 million or HK$3.25 billion in HengTen Network Group, its internet unit.  

Notably, the company has bifurcated the sale into two parts: a 7% share to a subsidiary of Tencent Holdings for HK$2.07 billion and the remaining 4% to an unnamed buyer for HK$1.18 billion.

As per sources, Tencent is already a 16.9% stakeholder in HengTen while at present Evergrande owns 37.55%. Post deal, Evergrande’s stake is slated to fall to 26.55% and Tencent’s holdings will rise to 23.9%.

According to a statement by Evergrande, the company has agreed to offer a five-year loan HK$2.07 billion to HengTen in order to support its business development.

Reportedly, HengTen’s shares are expected to resume trading starting August 2021 after being temporarily halted on July 29, 2021.  

Company investors took the news positively as HengTen’s stakes were trading nearly 32.16% higher than its previous close at HK$4.52 on the afternoon of August 2, 2021.

In line with above, Evergrande’s stakes were trading nearly 7% higher than its previous close at HK$5.62 on the Hong Kong Stock Exchange despite the filing being silent regarding the completion date of the transaction.

Concerns regarding the developer’s debt along with the potential for financial risk has intensified after Evergrande declared in June’21 that its project companies had not paid certain commercial paper on time, however it claimed it is arranging the payment.

Citing reliable sources, in July’21 the company’s flagship unit, Evergrande Real Estate Group, had nearly USD 31.83 billion worth of commercial paper by the end of 2020 which was 24% higher than 2019. 

In other news, in July 2021, China’s Huaibei Mining Holdings announced that its construction arm is filing a lawsuit against Evergrande Group over an overdue payment of USD 61.90 million.

It is also worth mentioning that during the same period, Evergrande stalled its plan of announcing a special dividend after American credit rating company, S&P Global Ratings downgraded the firm’s rating.

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Sunil Jha

Sunil Jha has been a part of the content industry for close to two years. Having previously worked as a voice over artist and sportswriter, he now focuses on writing articles for, across a slew of topics, ranging from technology to trade and finance. With a business-oriented educational background, Sunil brings forth the expertise of deep-dive research and a strategic approach in his write ups.