Evergrande sells $ 1.5 billion stake in Shengjing Bank to state-owned company

Evergrande in Hong Kong

The real estate company leaves no stone unturned to make money.

(Photo: Reuters)

Hong Kong In search of cash, the insolvent real estate company China Evergrande is selling its stake in Shengjing Bank to the state-owned investment company Shenyang Shengjing for around $ 1.5 billion. 1.75 billion shares, representing 19.93 percent of the bank’s issued share capital, will be sold to the company at a price of 5.70 yuan ($ 0.88) each, Evergrande said in a Hong Kong stock exchange release on Wednesday. The transaction will make Shenyang Shengjing the bank’s largest shareholder.

This step allows investors to breathe a sigh of relief. The shares of the real estate company are listed in Hong Kong 9.4 percent in the plus.

Evergrande is in the chalk with customers, banks and investors with more than 300 billion dollars and has fallen into arrears. The day before, however, hopes for government aid to rescue the ailing group rose: After investors had waited days for a comment from the government or central bank, the Chinese central bank signaled on Tuesday support for private investors to whom Evergrande owes billions. In addition, according to insiders, the government is urging state-owned real estate companies to take over parts of the ailing group.

The People’s Bank of China (PBOC) did not mention Evergrande by name, but promised to protect the rights and interests of private real estate investors. It will make monetary policy “flexible, targeted and appropriate” and ensure more stable credit growth and adequate liquidity in the market. The central bank pumped billions more into the financial market.

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Several government and regulatory insiders told Reuters that the state is unlikely to provide Evergrande with direct capital. Rather, Beijing hopes that partial sales to state-owned real estate firms such as China Vanke and China Jinmao Holdings will reduce the risk of social unrest.

Around 200,000 people work for Evergrande, and several million are recruited annually for construction projects. Angry investors stormed Evergrande headquarters a few weeks ago and asked for their money back.

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