Under mounting pressure from financial regulators to shore up its finances, China Evergrande Group (恒大集團) is poised to dump more of its sprawling empire.
The clock is ticking for billionaire Hui Ka Yan (許家印) and his company, which is laden with US$300 billion in liabilities to banks, suppliers and homebuyers.
Despite getting temporary relief from some major creditors, the message from policymakers is clear: The group must resolve its debt woes fast enough to avoid roiling the world’s second-largest economy.
Photo: Reuters
That means showing its goodwill by quickly selling assets, potentially at steep discounts. Evergrande might offload its Hong Kong headquarters and a large residential land parcel in the territory at a loss, Bloomberg and local media reported in the past week.
Since March, spooked investors have shaved about US$78 billion from the value of Hui’s electric vehicle (EV) and property management units, which are also on the block.
The share declines would dent how much Hui can hope to recover from asset sales. BNP Paribas in June estimated that the Shenzhen-based developer had US$80 billion of equity in non-property businesses that could help generate liquidity if sold.
“Evergrande bonds will ultimately rise or fall based on the company’s ability to monetize non-core assets ahead of existing repayment schedules and before Beijing runs out of patience,” said Brock Silvers, chief investment officer of Kaiyuan Capital in Hong Kong.
The Chinese central government has instructed authorities in Evergrande’s home province of Guangdong to map out a plan to manage the firm’s debt problems, including coordinating with potential buyers of its assets, Bloomberg reported earlier this month.
Beijing asked Guangdong officials to resolve the matter with a “market-oriented” approach, REDD reported on Thursday.
Evergrande has in the past few few months only raised about 10 billion yuan (US$1.54 billion) by paring its holdings in the EV arm, an Internet subsidiary, a small onshore property firm and a regional bank, according to Bloomberg calculations.
Gains from share sales helped to prop up first-half profit, which fell as much as 39 percent due to losses at the property and EV businesses, Evergrande said this week.
Following is a rundown of potential asset sales, together with estimates from analysts or reports on the amount each might raise:
‧ Hong Kong headquarters: potentially about US$1.3 billion for the building, according to Sing Tao Daily.
‧ Large residential land plot in Hong Kong’s New Territories: Evergrande is seeking about US$1 billion, a person familiar with the matter said.
‧ More of its EV unit following stake sales in January and May: as much as US$4.2 billion if it offloads its entire holding based on its closing price on Thursday.
‧ Property management subsidiary: as much as US$4.9 billion if it sells the lot at current value.
‧ More of its holding in Internet business HengTen Networks Group (恆騰網絡), after sales in June and this month: worth about US$1.2 billion.
‧ A 9.8 percent stake in a local property consulting firm E-House (易居): valued at about US$60 million.
‧ Rest of regional lender Shengjing Bank (盛京銀行): as much as US$2.8 billion if all goes for the same price as this month.
‧ Online sales platform FCB Group, which seeks a listing by the first quarter of next year: Evergrande’s remaining 90 percent stake could be worth US$18 billion based on a March valuation.
‧ Listing of its tourism business, which Evergrande fully owns: potential fundraising size is unclear.
‧ Listing of its water business: could raise several hundred million dollars, people familiar with the matter said in July.
SEEKING CLARITY: Washington should not adopt measures that create uncertainties for ‘existing semiconductor investments,’ TSMC said referring to its US$165 billion in the US Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) told the US that any future tariffs on Taiwanese semiconductors could reduce demand for chips and derail its pledge to increase its investment in Arizona. “New import restrictions could jeopardize current US leadership in the competitive technology industry and create uncertainties for many committed semiconductor capital projects in the US, including TSMC Arizona’s significant investment plan in Phoenix,” the chipmaker wrote in a letter to the US Department of Commerce. TSMC issued the warning in response to a solicitation for comments by the department on a possible tariff on semiconductor imports by US President Donald Trump’s
‘FAILED EXPORT CONTROLS’: Jensen Huang said that Washington should maximize the speed of AI diffusion, because not doing so would give competitors an advantage Nvidia Corp cofounder and chief executive officer Jensen Huang (黃仁勳) yesterday criticized the US government’s restrictions on exports of artificial intelligence (AI) chips to China, saying that the policy was a failure and would only spur China to accelerate AI development. The export controls gave China the spirit, motivation and government support to accelerate AI development, Huang told reporters at the Computex trade show in Taipei. The competition in China is already intense, given its strong software capabilities, extensive technology ecosystems and work efficiency, he said. “All in all, the export controls were a failure. The facts would suggest it,” he said. “The US
The government has launched a three-pronged strategy to attract local and international talent, aiming to position Taiwan as a new global hub following Nvidia Corp’s announcement that it has chosen Taipei as the site of its Taiwan headquarters. Nvidia cofounder and CEO Jensen Huang (黃仁勳) on Monday last week announced during his keynote speech at the Computex trade show in Taipei that the Nvidia Constellation, the company’s planned Taiwan headquarters, would be located in the Beitou-Shilin Technology Park (北投士林科技園區) in Taipei. Huang’s decision to establish a base in Taiwan is “primarily due to Taiwan’s talent pool and its strength in the semiconductor
French President Emmanuel Macron has expressed gratitude to Hon Hai Precision Industry Co (鴻海精密) for its plan to invest approximately 250 million euros (US$278 million) in a joint venture in France focused on the semiconductor and space industries. On his official X account on Tuesday, Macron thanked Hon Hai, also known globally as Foxconn Technology Group (富士康科技集團), for its investment projects announced at Choose France, a flagship economic summit held on Monday to attract foreign investment. In the post, Macron included a GIF displaying the national flag of the Republic of China (Taiwan), as he did for other foreign investors, including China-based
RSS