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China Evergrande Agrees to Sell 20% Stake in Shengjiang Bank, Shares Soar

By Gina Lee – China Evergrande Group (HK:3333) has agreed to sell a 20% stake in Shengjing Bank Co Ltd (HK:2066) to the local Shenyang government for CNY10 billion ($1.54 billion).

The developer’s Hong Kong shares jumped 9.36% to HK$2.92 ($0.38) by 1:24 AM ET (5:24 AM GMT), after soaring over 10% earlier in the session. It will sell around 1.75 billion non-publicly traded domestic shares in Shengjing Bank to Shenyang Shengjing Finance Investment Group Co. at CNY5.7 yuan apiece, according to a statement to the Hong Kong Stock Exchange.

Shengjing Bank was untraded after closing at HK$7 on Tuesday.


China Evergrande’s dollar bond due 2022 was indicated down a touch at 25.3 cents on the dollar while its 2025 note is unchanged at 23.5 cents, according to Bloomberg.

The company's share in Shengjing will drop to 14.57% once the transaction completes. It had previously sold a stake in the lender that netted it around CNY1 billion in August 2021.

China Evergrande chairman Hui Ka Yan has been under increasing pressure to spin off and sell assets to pay down the company’s massive debt. Its original 36% stake in Shengjing Bank was one of its most valuable financial assets, worth around $2.8 billion.

However, the asset’s value has diminished recently as regulatory oversight on dealings such as preferential lending and bond purchases between banks and their largest shareholders were tightened. The sale is also likely to be of little help in lifting China Evergrande out of its debt woes. The company has a coupon payment of $47.5 million due on Wednesday, after missing a bond interest payment due the previous week.

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