Evergrande buys a series of new projects from New World China
By Staff Writer
Evergrande Real Estate Group Ltd, one of the biggest real estate group in China announces that the company had closed a series of deals to acquire development project from the Hong Kong real estate billionaire's company. The 7.3 billion Yuan deal means that the company is extending its acquisition spree for 2015.
According to The Malay Mail, New World China agrees to sell property in Guiyang and Chengdu for the said amount as stated in the company's statement to the stock exchange today. The latest acquisition means that Evergrande now owns 60 percent worth of stake in the development for both cities.
The International Business Times also reported that the company is also working on a deal to buy five real estate project from the Chow Tai Fook Enterprise Ltd, a company own by the Cheng family too.
Although the real value of the deal is not yet confirmed, analysts looking into it said that it is estimated to be around 2 billion Yuan for Shandong province development alone.
The total purchase made from the Chow Tai Fook Enterprise could be around 13.1 billion Yuan including development project for luxury residential in Beijing. The latest deals also mean that the ties between the Cheng family with Evegrande and more new deals could be materialized in the future.
RHB OSK Securities Hong Kong Ltd analyst, Toni Ho told reporters in an interview that "By selling the project to Evergrande, New World China Ltd is trying to cash out of their assets, in the meantime, they are helping Evergrande in their purchase by giving them support in financing."
Bloomberg reported that Evergrande which is own by a Chinese billionaire, Joseph Lau previously announced that it would raise up to $1.5 billion by selling perpetual securities to obtain more cash flow forthe future project. However, all the securities sold will not be able to be converted into equity.
The latest acquisition is the last deal pulls by the company before the end of this year. Another record purchase made by Evergrande includes the purchase to develop Mass Mutual Tower in Hong Kong which is recorded as the most expensive offices in Hong Kong.
The company's shares were suspended on Monday morning prior to the latest announcement but its stock managed to climb up to 4 percent before the suspension. Franco Leung, a Moody's vice president and senior analyst said in a statement that the company's spending need to be curb as it will cause trouble to the company in the future as the current trend will cause its debt leverage to increase.