Chinese Estates Shares Soar More Than 30% as it Proposes Privatization

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By Gina Lee – Chinese Estates Holdings Ltd . (HK:0127) shares jumped as much as 31% on Thursday after the former major shareholder in China Evergrande Group (HK:3333) proposed to go private for a HK$1.91 billion ($245.30 million) price tag.

China Estates' Hong Kong shares soared 30.69% to HK$3.79 by 12:37 AM ET (4:37 AM GMT).

The privatization offer comes from Solar Bright Ltd., which is backed by the family of Chinese Estates' biggest shareholder Joseph Lau. Chinese Estates’ proposal will offer minority shareholders HK$4 apiece, a 38% premium to the developer's last traded price.

Chinese Estates was the second-largest shareholder in China Evergrande with a 6.48% stake, before selling it down since August 2021 to the 4.39% it holds as of Thursday. Lau, Chinese Estates' former chairman, is a member of a ‘poker club’ of Hong Kong tycoons that included China Evergrande chairman Hui Ka Yan. China Evergrande, meanwhile, continues to deal with its debt woes.

Chinese Estate shares have been suspended from trading since Sep. 29 and were down 42% in 2021 before the suspension. A privatization would reduce the costs and management resources needed for listing, and could provide more flexibility to implement long-term business strategies.

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