China Evergrande New Energy Vehicle Group, a subsidiary of real estate conglomerate China Evergrande Group, is bringing a group of big-name investors including Tencent, Sequoia Capital and Didi Chuxing on board through a share sale which should raise HK$4 billion ($516 million).
China Evergrande New Energy Vehicle Group said that its controlling shareholder, China Evergrande Group, plans to sell 176 million existing shares priced at HK$22.65 each, representing a 19.96% discount to Monday’s closing price of HK$28.3, according to a stock filing published Tuesday. After the deal, China Evergrande Group would see its holding drop to 72.95% from 74.99%.
The proceeds from the share sale will be used for general corporate purposes, the filing said.
China Evergrande Group first entered the new energy vehicle sector in 2018 through its subsidiary Evergrande Health, which was renamed China Evergrande New Energy Vehicle Group in September this year.
Since 2019, China Evergrande Group has spent more than 20 billion yuan to develop an entire new energy vehicle industry chain, complete with vehicles, batteries, motors and power systems.
In August, Evergrande Health surprised the whole industry by releasing six pure electric vehicles with the first being launched in the second half of next year.
However, China Evergrande New Energy Vehicle Group is facing the same problem as many young electric vehicle makers and that is how to become profitable. According to its 2020 interim earnings report, the company suffered a net loss of 2.46 billion yuan in the first six months of the year, compared with 1.98 billion yuan in the same period a year earlier.
Contact reporter Ding Yi (firstname.lastname@example.org)