China Evergrande is introducing 14 investors to the equity base of Mangrove 3 in a move Reuters said would pave the way for an initial public offering for the property management arm.
News of a potential spin-off is nothing new, after all, at the end of July, the Cayman Islands-incorporated conglomerate said it was looking into the possibility of selling a deemed interest in this arm in a listing in Hong Kong.
However, it cautioned details were yet to be finalised and would be subject to regulatory and shareholder approvals, not to mention market conditions.
No further information was disclosed at the time, but yesterday’s announcement indicated Evergrande planned to introduce 14 investors to Mangrove 3 by selling a 28.1 per cent stake worth HKD 23.50 billion (USD 3.03 billion).
The real estate and hotels to new energy vehicles and internet conglomerate added the strategic investment would introduce a number of strategic backers to enhance the Cayman Islands-incorporated subsidiary’s corporate profile and support its growth and development.
It noted the deal is as part of plans to reorganise this entity into a holding company for the group’s property management business.
Mangrove is an investment entity involved in 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.
Evergrande recorded turnover and gross profit of CNY 477.60 billion (USD 68.76 billion) and CNY 132.90 billion, respectively, in the financial year ended 31st December 2019.
Net profit attributable to shareholders totalled CNY 17.30 billion.
According to the annual report, revenue generated from property management amounted to CNY 4.38 billion over the 12 months, up from CNY 4.07 billion in FY 2018.
© Zephus Ltd