China Evergrande Group will sell 10% of car and real estate e-commerce site Fangchebao (FCB) to 17 investors for $2.10 billion, the developer announced, as it tackles mounting debts before taking the business public.
Evergrande’s interest-bearing debt at the end of 2020 was HK$110 billion($14.15), a burden it will address by spinning off a handful of units including Fangchebao.
The e-commerce site is valued around $23 billion, according to exchange filings, and proceeds raised will go towards general corporate purposes as well as repaying debts.
After announcing the deal Monday morning, Evergrande’s Hong Kong-listed stock rose more than 8% to HK$16.08.
Fengchebao’s new investors are predominantly mainland-affiliated and include investment manager CITIC Capital as well as Evergrande CEO Xia Haijun.
“FCB innovatively applies big data, artificial intelligence, cloud computing, virtual reality and other digital technologies to ... match buyers and sellers,” Evergrande said.
Evergrande’s financial position will be greatly “enhanced, furthering the rapid development of FCB," the embattled real estate company said.
Fengchebao will remain an indirect non-wholly owned subsidiary of Evergrande China, and if an initial public offer does not take place within a year, the 17 investors can have the developer repurchase their shares at a 15% premium.
This is the third major fundraising exercise undertaken by Evergrande in almost as many months.
Evergrande Property Services Group listed in December and raised $1.8 billion in the process, and China Evergrande New Energy Vehicle Group has committed to sourcing another $3.4 billion from investors.
