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Chinese property tycoon to sell stake as share sales ramp up

Chinese property tycoon to sell stake as share sales ramp up
Apartment buildings at the Phoenix City residential project, developed by Country Garden Holdings Co., in Shanghai, China, on Monday, Jan. 17, 2022. The crisis engulfing China’s property sector is impacting its biggest developer, with Country Garden's shares and bonds hammered amid fears that a reportedly failed fundraising effort may be a harbinger of waning confidence. (Photo: Qilai Shen/Bloomberg)

The billionaire owner of Country Garden Holdings Co is selling a stake in a unit to raise about $650-million amid a flurry of share sales by cash-strapped Chinese developers.  

Yang Huiyan agreed to sell 237 million shares of Country Garden Services Holdings Co at HK$21.33, according to a statement to the Hong Kong stock exchange on Sunday. That represents a 10.9% discount to the latest closing price.

Shares of both companies dropped, along with those of Seazen Group Ltd, which separately announced an equity offering. 

Yang is co-chairman of Country Garden, the property giant founded by her father, and chairman of its property management spinoff Country Garden Services. Bloomberg reported the sale plans last week. The 41-year-old has an estimated net worth of $12.1-billion, according to the Bloomberg Billionaires Index. 

Country Garden has tapped the Hong Kong equity market twice in the past month, raising more than $1-billion to shore up finances that have been hurt by an unprecedented housing slump. Chinese developer shares have soared in recent weeks as authorities unwound a clampdown on leverage by encouraging fundraising through bond and stock sales as well as bank loans.

“The share sale of Country Garden Services will boost bond investor sentiment,” said Daniel Fan, senior credit analyst at Bloomberg Intelligence. The chairman could lend part of the proceeds to the holding company for debt servicing, or she could use it to buy back bonds in the secondary market, Fan said.

Some of Country Garden’s dollar bonds were indicated as much as 1 cent higher Monday morning, according to Bloomberg-compiled prices. 

Seazen, CIFI

Shares of Country Garden declined as much as 6.5% in Hong Kong before paring the bulk of the losses. Country Garden Services slumped as much as 18%, the most since July.

Seazen Group lost as much as 13%. The developer agreed to sell shares to raise HK$1.96-billion ($252-million) in a placement. The deal will provide funding to repay offshore debts and use as general working capital, it said in a stock exchange filing. 

Meanwhile, CIFI Holdings Group Co announced plans to sell a stake in a unit to create liquidity and reduce leverage. It invited potential bidders to buy shares of its CIFI Ever Sunshine Services Group and commenced preliminary discussions on the bidding process, a filing showed on Monday.

CIFI defaulted on a convertible bond in October and has since suspended offshore financing payments, highlighting deepening stress in the property sector. The company plans to present a holistic solution to its creditors and other stakeholders no later than the first quarter of 2023, it said.

As well as in Hong Kong, equity fund raising has picked up in mainland China after the government last month ended a ban on listed companies selling more shares at home. Some 17 listed Chinese property developers or firms with real estate businesses announced plans to raise more equity funds, the Financial News reported last week.

Agile Group Holdings Ltd, which develops villa apartments and high-rise homes set amid landscaped gardens, tapped the secondary market in Hong Kong last month, raising just over $100-million. Last week, it amassed another $63.5-million through the sale of units in A-Living Smart City Services. BM/DM

 

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