Chinese developer Country Garden Holdings Co. will sell a 9.9 percent stake to Ping An Insurance Group Co., China’s second-biggest insurer, for about HK$6.3 billion ($812 million) to fund projects and boost capital.
The developer will sell 2.24 billion new shares to Ping An’s life insurance unit at HK$2.816 each, about a 10 percent discount to the last traded price of HK$3.13, according to a Hong Kong stock exchange filing on Wednesday. Country Garden stock will resume trading on Thursday.
Ping An’s investment in the builder comes after China’s government relaxed home-buying curbs this week, seeking to revive a slumping property market that’s weighed on the broader economy. Shares of Country Garden, controlled by China’s second-richest woman Yang Huiyan, have dropped 7.7 percent in the past year, trailing Hong Kong’s benchmark Hang Seng Index, which has gained about 12 percent.
“Ping An will continue to provide support to Country Garden on the basis of this strategic cooperation, which will help facilitate the group’s financing,” the developer said in an e-mailed press release. “Both parties might further their ties on investment, financial, funds and asset management.”
The investment will make Ping An the developer’s second-largest shareholder and dilute Yang’s holding to 53.6 percent from 59.5 percent, according to Country Garden. The developer plans to use the money to fund development projects and as general working capital, according to the statement.
“It’s quite positive for the long-term development of the company, Alan Jin, a Hong Kong-based real estate analyst for Mizuho Securities Asia, said an e-mail. The deal brings in ‘‘a well know mega company’’ and will cut ‘‘gearing and potential funding cost, broadening its business opportunities.’’
Rival Chinese developers have also brought in major equity investors in the past year. Greentown China Holdings Ltd. said in December it would sell a 24 percent to state-owned China Communications Construction Group and Sino Life Insurance Co. took a stake in troubled developer Kaisa Group Holdings Ltd. the same month.
Country Garden, the nation’s third-biggest developer by area sold, is expected to face cash flow pressure as it pulls back from ‘‘overaggressive expansion’’ in 2013 amid a slowing market, Barclays Plc analysts led by Alvin Wong wrote in a March 12 note.
The company is targeting 5 percent growth in contract sales this year, after a 22 percent gain in 2014, President Mo Bin said in a March 11 briefing. While China’s property market woes are expected to continue this year, the policy environment should be better, he said.
(An earlier version of this story was corrected because of an incorrect currency in the lead.)