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“Buy, buy, buy, unite, circle, big, big, good, good”, “Money for time”, Xu Jiayin once said about Evergrande’s road to build cars. From the current point of view, the “money” of Evergrande Motor, in addition to the “recharge” of its own main business, is indispensable to Xu Jiayin’s “circle of friends.”
On January 25, the stock price of Evergrande Automobile (0708.HK) soared to a record high, rising by more than 60% at one time, and closing at HK$45.35 per share. The market value is close to 400 billion Hong Kong dollars, a sharp increase of 136.2 billion Hong Kong dollars from last Friday on January 22, far exceeding the 222.7 billion market value of China Evergrande (03333, HK), the main real estate business.
The catalyst for the stock price surge was the equity financing news issued by Evergrande Motor the previous day. On January 24, Evergrande Auto placed 952 million new shares to six investors, attracting a total of 26 billion Hong Kong dollars. It is one of the largest equity financings in the history of the new energy automobile industry.
Unlike other large companies that usually use investment banking institutions to raise funds through allotments, Xu Jiayin’s circle of friends has played a pivotal role.
Many of this group of strategic investors have participated in other business sectors of Evergrande as cornerstone investors or strategic investors. There are also some people who were or are still business partners of Evergrande.
Evergrande has introduced a total of six strategic investors this time, namely Chengyu Holdings Co., Ltd. (HK$5 billion), Shangyu Co., Ltd. (HK$5 billion), He Yirong International Trade Co., Ltd. (HK$5 billion), and Cui Lin Global Investment Co., Ltd. (HK$5 billion), Ms. Chen Kaiyun (HK$3 billion) and Mr. Liu Minghui (HK$3 billion).
Chengyu Holdings is a wholly-owned subsidiary of Shenzhen Real Estate Enterprise Jingji Group. Chairman Chen Hua subscribed for HK$236 million as a cornerstone investor when Evergrande Property went public in December last year.
The actual controller of Shangyu is Huang Guangmiao, the founder of Zhongzhou Group, who is also a bigwig in the real estate industry. He also pledged to raise HK$236 million in Evergrande Property.
Cuilin Global Investment is even more closely related to Evergrande, and is the successor to Evergrande’s ice spring, grain and oil, agriculture, animal husbandry, and dairy industries.
He Yirong is wholly-owned by Wang Kaiguo and is principally engaged in bulk trading and private equity and secondary market investments.
Individual investor Chen Kaiyun, better known as Gambie, led the investment of HK$4.5 billion before the listing of Evergrande Property, and was the wife of Hong Kong tycoon Liu Luanxiong. Liu Luanxiong is the former chairman and chief executive officer of the Chinese Real Estate Group. He holds more than 5% of China Evergrande. He also continues to buy Evergrande bonds and has participated in Evergrande capital operations many times.
Liu Minghui is the chairman of the board of directors of China Gas Group. China Gas and Evergrande have cooperated a lot recently.According to the official WeChat account of China Gas Taiyuan Branch, on November 19, 2020, Liu Minghui visited Evergrande Group’s Shenzhen Headquarters to visit Xia Haijun, Vice Chairman and President of Evergrande Group. Both parties are engaged in gas supply business, livable projects, value-added services, New retail and land revitalization and value-added fields reached a consensus on in-depth cooperation, and agreed to establish a comprehensive strategic partnership.
This is the second capital increase of Evergrande Auto in six months. The last round of investment was September 15, 2020. Evergrande Auto introduced investments such as Tencent, Sequoia Capital, Yunfeng Fund and Didi Chuxing in a first-of-a-kind approach. , Raised about 4 billion Hong Kong dollars. In September 2020, Evergrande Automobile announced that it planned to issue RMB shares and list on the Science and Technology Innovation Board of the Shanghai Stock Exchange.
Except for Xu Jiayin’s circle of friends, Evergrande’s own main business “recharge” still occupies the majority. Before this investment, Evergrande Group held 74.95% of the equity of Evergrande Automobile; after this investment, Evergrande Group’s shareholding fell to 67.64%.
At the 2020 interim results report meeting, Evergrande Automobile announced the investment situation and forecast of the automobile industry. According to the plan, Evergrande Group will provide financial support to Evergrande Automobile from 2019 to 2021, totaling 29.4 billion yuan. According to the capital investment plan, 14.7 billion yuan has been invested in 2019; 5.7 billion yuan will be invested in 2020; 9 billion yuan is expected to be invested in 2021.
It is worth noting that in one month of December 2020, Evergrande Group has increased its holdings of Evergrande Automobile 17 times, involving more than HK$3 billion, and its shareholding ratio has risen from 73.5% to 74.95%.
Especially on the last four trading days of 2020, on December 28, 29, 30 and 31, Evergrande Group increased its holdings by 150,000 shares, 230,000 shares, 930,000 shares and 740,000 shares, respectively. The average price per share was 28.57 Hong Kong dollars ~ 30.19 Hong Kong dollars.
In fact, in addition to the well-known real estate sector, automobiles are one of the important puzzles for Evergrande Capital. The predecessor of Evergrande Auto was Evergrande Health. In 2018, Evergrande Group officially deployed the new energy industry. In August 2020, it officially changed its name to Evergrande Auto. The stock price rose by nearly 170% in the month of the change.
According to statistics, since the start of 2020, China Evergrande’s cumulative increase has been -14.74%. The Evergrande property that was split and listed on December 2, 2020 has increased by 70.81% so far, while Evergrande Motor’s increase has been 472.6%.
Within Evergrande, Evergrande has always been aligned with Tesla, the leader in new energy vehicles, and the RV treasure is the shell. Focusing on the two areas of real estate and automobiles, Xu Jiayin officially unveiled the RV Bao Group on December 30, 2020, building an Internet platform for real estate and automobile online and offline omni-channel transactions. In addition to “buying blood”, sales channels have also paved the way.