(Bloomberg) -- The controlling shareholder of Country Garden Holdings Co. is selling a roughly $650 million stake in a unit amid a flurry of share sales by cash-strapped Chinese developers.
Billionaire Yang Huiyan agreed to sell 237 million shares of Country Garden Services Holdings Co. at HK$21.33, according to a statement to the Hong Kong stock exchange on Sunday. That represents a 10.9% discount to last week’s closing price.
Shares of both companies dropped, along with those of Seazen Group Ltd., which separately announced an equity offering, while their bonds rose.
Yang is co-chairman of Country Garden, the real estate giant founded by her father, and chairman of its property management spinoff Country Garden Services. Bloomberg reported the sale plans last week. The 41-year-old has an estimated net worth of $12.1 billion, according to the Bloomberg Billionaires Index.
Country Garden has tapped the Hong Kong equity market twice in the past month, raising more than $1 billion to shore up finances that have been hurt by an unprecedented housing slump. Chinese developer shares have soared in recent weeks as authorities unwound a clampdown on leverage by encouraging fundraising through bond and stock sales as well as bank loans.
“The share sale of Country Garden Services will boost bond investor sentiment,” said Daniel Fan, senior credit analyst at Bloomberg Intelligence. The chairman could lend part of the proceeds to the holding company for debt servicing, or she could use it to buy back bonds in the secondary market, Fan said.
Country Garden is also being lined up for fresh offshore loans, according to a Cailian report. Industrial & Commercial Bank of China Ltd. plans to lend it $300 million backed by a domestic guarantee, although the amount isn’t final, the report said.
Some of Country Garden’s dollar bonds jumped by as much as 3 cents on the dollar Monday, according to Bloomberg-compiled prices. Bonds of Seazen Group and Agile Group Holdings Ltd. also rose on stock-sale plans.
Shares of Country Garden ended 5.2% lower in Hong Kong on Monday. Country Garden Services slumped 17% for the session, the most since July 27.
Seazen Group finished 17% lower. The developer agreed to sell shares to raise HK$1.96 billion ($252 million) in a placement. The deal will provide funding to repay offshore debts and use as general working capital, it said in a stock exchange filing.
A Bloomberg Intelligence gauge of Chinese developers has climbed about 81% since the end of October as the government’s efforts to rescue the property market mounted.
Meanwhile, CIFI Holdings Group Co. announced plans to sell a stake in a unit to create liquidity and reduce leverage. It invited potential bidders to buy shares of its CIFI Ever Sunshine Services Group and commenced preliminary discussions on the bidding process, a filing showed on Monday.
CIFI defaulted on a convertible bond in October and has since suspended offshore financing payments, highlighting deepening stress in the property sector. The company plans to present a holistic solution to its creditors and other stakeholders no later than the first quarter of 2023, it said.
As well as in Hong Kong, equity fund raising has picked up in mainland China after the government last month ended a ban on listed companies selling more shares at home. Some 17 listed Chinese property developers or firms with real estate businesses announced plans to raise more equity funds, the Financial News reported last week.
Agile Group, which develops villa apartments and high-rise homes set amid landscaped gardens, tapped the secondary market in Hong Kong last month, raising just over $100 million. Last week, it amassed another $63.5 million through the sale of units in A-Living Smart City Services.
--With assistance from Lorretta Chen.
(Updates with report of bank loan in seventh paragraph; closes shares)
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