By Gina Lee
Investing.com – China Evergrande Group's (HK:3333) shares jumped after the company said it is in discussions to sell stakes in two of its units, that could potentially inject fresh funds.
A statement released after hours on Tuesday said that the talks are with “several independent third-party investors” who are looking to purchase stakes in the property firm’s electric vehicle start-up and property services units.
China Evergrande stocks jumped 8.52% to HK$6.37 ($1.09) by 1:03 AM ET (5:03 AM GMT), after jumping as much as 12% earlier in the session.
The sale could help the company avert a liquidity crisis, as it currently has more than $300 billion in liabilities.
Assuming Evergrande maintains control of the auto and property services units, the firm may raise about HK$25 billion ($3.21 billion) from selling the minority stakes, CGS-CIMB Securities property analyst Raymond Cheng told Bloomberg.
“It’s positive for Evergrande... we prudently believe that Evergrande bankruptcy risk may not be as high as bond prices suggested,” Cheng added.
Other investors were also positive about the sale’s prospects.
“The potential asset sales could be wide-ranging,” Bloomberg Intelligence credit analyst Daniel Fan said in a note. The company’s unlisted units, such as online sales platform Fangchebao, could also be sold, although likely at a deeper discount, the note added.
Also among other potential future funding sources are placements for Evergrande Property Services Group Ltd. and China Evergrande New Energy Vehicle Group Ltd., and initial public offerings for operations including its beverage business, FCB, and amusement park and tourism properties, according to Fitch Ratings.