Evergrande Invests $1.4 Billion in Competitor China Vanke

Updated on
  • Developer buys 4.68% stake in Vanke, cites strong performance
  • Vanke embroiled in ownership tussle with big shareholder

Evergrande Invests $1.4B in Vanke

Evergrande Real Estate Group Ltd., controlled by billionaire Chairman Hui Ka Yan, paid 9.1 billion yuan ($1.4 billion) for a 4.68 percent stake in China Vanke Co., the competitor embroiled in an ownership tussle with a key shareholder.

The Guangzhou-based developer bought Vanke’s Shenzhen-traded shares through a unit, it said in a filing to Hong Kong’s stock exchange after the market close on Thursday. Evergrande cited Vanke’s "strong" financial performance as China’s largest developer as a reason for its investment, according to the filing.

Vanke, China’s biggest residential developer by sales, has been in a battle for control since last year when Baoneng Group displaced China Resources (Holdings) Co. as the property company’s largest stakeholder. The entry of Evergrande as a shareholder is the latest twist in a dispute that has even drawn scrutiny from China’s securities regulator.

The China Securities Regulatory Commission last month urged Vanke’s management and shareholders to end their dispute and reprimanded them for ignoring market stability and tarnishing the company image.

Evergrande Acquisitions

Evergrande earlier on Thursday denied a media report saying that the developer had purchased a stake in Vanke. The A-shares of Vanke surged by the 10 percent daily limit on Thursday, advancing for a fourth day, to close at 19.67 yuan on the Shenzhen exchange. That was the biggest increase since trading resumed July 4 after a six-month suspension.

Evergrande, based in Guangzhou in southern China, has been one of the most acquisitive developers in the country. It paid 3.6 billion yuan earlier this year for a stake in Shenzhen-listed China Calxon Group Co. and acquired Mass Mutual Tower in Hong Kong last year, as well as agreeing to buy assets from New World China Land Ltd.

The company’s buying spree went beyond real estate. In April, Evergrande boosted its stake in Shengjing Bank Co. In November, it bought a 50 percent stake in Great Eastern Life Assurance Co.’s Chinese joint venture for 3.9 billion yuan.