Evergrande Auto to Raise USD516m by Selling Existing Shares

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China Evergrande New Energy Vehicle (NEV) Group (Evergrande Auto) [0708:HK], which was known as Evergrande Health, reported on the HKEX [0388:HK] website on September 15 that its controlling shareholder, China Evergrande Group [3333:HK], will sell 176m existing shares to at least six third-party investors, including Tencent [0700:HK], Sequoia Capital, and Didi Chuxing. The stocks will be priced at HKD22.65 per share, representing a 19.96% discount to the closing price on September 15, with an aim to raise HKD4bn (USD516m). Upon completion of the deal, China Evergrande’s holding in its NEV subsidiary will slide to 72.95% from 74.99%.

Real estate giant China Evergrande branched out in the NEV sector in June 2018 by acquiring a 45% stake in NEV start-up Faraday Future. In 2019, Evergrande Auto successively formed collaborations with Swedish automaker Koenigsegg, German engineering company Hofer, and component supplier Benteler, aiming to build an entire NEV industry chain. Citing China Evergrande Chairman, Xu Jiayin, the group plans to invest RMB45bn in the NEV businesses from 2020 to 2022 and start mass production of NEVs in 2021. The NEV unit unveiled its first batch of six pure electric vehicles this August, which will be debuted in 2H21. However, the firm recorded a net loss of RMB2.46bn in the first six months of this year amid the sluggish auto market due to the COVID-19 pandemic, increasing from that of RMB1.98bn in 1H19.

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