Chinese media are reporting the likely sale of a 51 per cent stake in Evergrande’s property management unit to state-backed Hopson Development for US$5 billion – a move interpreted as a type of state bailout.
Trading in Evergrande’s shares was suspended by the Hong Kong exchange on Monday after the debt-laden company missed its second offshore bond interest payment last week.
In a statement posted to the exchange it said trading would be suspended “pending the release by the company of an announcement containing inside information about a major transaction”.
It was state-backed Global Times that first reported Hopson’s interest in Evergrande, quoting unspecified reports. Murmur amplified once Hopson too suspended its shares, pending an important announcement.
Both companies failed to respond to Global Times’ requests for comment.
Hopson is based in the southern Chinese province of Guangdong.
According to local media, the Chinese government fears the move could be seen as a government bailout at a time when it is pushing companies to reduce their debt levels.
Commenting on reports of the likely sale, AMP Capital chief economist Shane Oliver said, “something like that seemed inevitable”.
“I wouldn’t quite call it a bailout though as the government’s focus is likely to be on protecting homebuyers, suppliers and preventing a contagion through the property sector and economy. Hard to see Evergrande shareholders and senior managers being protected,” he added.
In late September, Evergrande Group’s main unit, Hengda Real Estate Group, serviced an interest payment on the Shenzhen-traded 5.8 per cent September 2025 bond. However, it is believed Evergrande has since missed two offshore bond interest payments.
Ultimately, the company, which boasts 1,300 building projects across China, is saddled with debt exceeding $400 billion.
