China Evergrande Group has sold part of its stake in its online home and car sales service company FCB Group for HK$16.4 billion ($2.1 billion). The divestment was made ahead of the company's planned listing in the U.S., where it hopes to tap into foreign investors to help finance its growth.
Two subsidiaries have issued a combined 1.3 billion new shares of its business unit that holds a majority stake in the online sales company, China Evergrande in a filing submitted Monday. The buyers will hold a 10% in the unit.
Sources familiar with the matter said that China Evergrande - through FCB Group - will launch an initial public offering in the U.S. as soon as the fourth quarter of this year. The subsidiary currently has a market valuation of roughly $20 billion.
Strategic investors that joined the company's latest funding round included big-name executives such as New World Development Co. Ltd.'s Henry Cheng and CC Land Holdings Ltd.'s Cheng Chung Kiu. Others include a company controlled by Wang Zhongming.
China Evergrande must list the online sales unit on the Nasdaq or other boards within 12 months of the deal. If it can't it has agreed to repurchase the shares at a 15% premium.
The same sources said China Evergrande has approached prospective investors for a pre-initial public offering funding round. The company is aiming for a pre-listing valuation of around $23 billion.
China has imposed new lending restrictions for real estate companies. China Evergrande has been turning to outside investors and public markets to raise funds. In January, the company sold roughly $3.4 billion worth of shares of its car unit to several foreign buyers.
China Evergrande's Hong Kong-listed stock jumped by as much as 8.5% Monday. The stock was trading at around HK$15.40 per share by midday.