China Evergrande is opening up the equity base of Mangrove 3 by selling a 28.1 per cent stake worth HKD 23.50 billion (USD 3.03 billion) to 14 investors.
The deal is part of plans to reorganise the Cayman Islands-incorporated subsidiary into a holding company for the group’s property management business.
Mangrove is an investment entity providing services ranging from concierge, security, clearing and gardening to repair and maintenance and car parks.
Other value-added activities to non-property owners include pre-delivery of homes or offices, such as site management, show flats, sales offices and planning and consultation.
Services to residents include community assets operations, looking after estate public areas and civic life.
In the 12 months ended 31st December 2019, Mangrove booked pre-tax and net profit of CNY 1.23 billion (USD 177.07 million) and CNY 922.50 million, respectively, up from CNY 313.70 million and CNY 233.30 million, respectively, in FY 2018.
Evergrande, which is carrying out the deal via wholly-owned CEG Holdings, noted the introduction of strategic investors would enhance the unit’s corporate profile and support its growth and development.
Purchasers include: Huatai International Greater Bay Area Investment; Sequoia Capital Operations’ SCC Growth VI 2020; CITIC Capital Holdings’ CC Eagle Investments; YF Evergreat Property; Tencent Holdings’ affiliated entities; and China Dragon.
Other backers range from Tise Capital Management, a subsidiary of Agricultural Bank of China, and a China Everbright-owned vehicle, to entities controlled by third parties, Evergrande’s chief executive, and the family of Cheng Kar-Shun.
Zephyr, the M&A database published by Bureau van Dijk, shows the deal is among the top 20 minority stake transactions announced globally so far this year.
PNC Bancorp cashed in on its 20.5 per cent interest in BlackRock in the largest of these, which was worth USD 13.28 billion,
Other targets range from Patton Oilfield Services and Adnoc Gas Pipeline assets to Regeneron Pharmaceutical and China Everbright Bank.
The Mangrove deal may be part of plans to float the property management business, a proposal Evergrande announced at the end of July.
© Zephus Ltd