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China Evergrande rises 17.9% after deal with Hengda investors, unit applies listing

FILE PHOTO: A logo of China Evergrande Group is displayed at a news conference on the property developer's annual results in Hong Kong, China March 28, 2017. REUTERS/Bobby Yip

HONG KONG (Reuters) - Shares of China Evergrande Group 3333.HK rose as much as 17.9% after the property developer reached a deal with some investors in its unit Hengda Real Estate to ease cash-crunch concerns.

The shares rose as high as to HK$19.46 ($2.51), the highest since Aug. 21, and ranked the fifth most actively traded by turnover in morning trading.

China second-biggest property developer by sales reached a deal on Tuesday in which investors holding 86.3 billion yuan ($12.66 billion) of Hengda agreed not to ask the debt-laden property developer to repurchase their holdings.

The Guangzhou-based developer also said its property-management services unit, Evergrande Property Services Group Ltd, has submitted an application for a listing on the Hong Kong bourse. Reuters publication IFR had reported the float would raise $2 billion.

The statement came days after the developer's vehicle manufacturing arm, China Evergrande New Energy Vehicle Group Ltd 0708.HK, said it intended to apply for a listing of its shares on Shanghai's Sci-Tech Board.

The developer is under pressure to slash debt as China’s government tackles what it considers excessive borrowing in the real estate development sector with new debt ratio caps.

China Evergrande had said that its debt-cutting measures were working and that the Hong Kong bourse had approved its plan to spin off the property management service arm, which sent their shares up on Monday after a selloff last week.

Shares of China Evergrande New Energy Vehicle surged as much as 9.9% on Wednesday, while internet services unit HengTen Networks Group 0136.HK rose as much as 8.6%.

Reporting by Donny Kwok; Editing by Christian Schmollinger and Gerry Doyle

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