The Stock Exchange of Hong Kong Ltd. gave its in-principle approval for China Evergrande Group's reorganization through a planned asset injection into a Shenzhen-based developer.
The approval for the proposal, which involves a spinoff, was granted Jan. 24, according to a filing. China Evergrande noted that it and its Hengda Real Estate Group Co. Ltd. subsidiary are continuing the discussions for the final terms of the agreement with Shenzhen Special Economic Zone Real Estate & Properties (Group) Co. Ltd.
In October 2016, Hengda Real Estate and the Shenzhen company signed a cooperation deal, which was seen as the Hong Kong-listed China Evergrande's way of orchestrating a possible backdoor listing in the mainland. Eight investors have since agreed to buy an approximately 13.16% stake in Hengda Real Estate for 30 billion Chinese yuan, the same amount that Hengda Real Estate could invest in the Shenzhen developer.
As of Jan. 24, US$1 was equivalent to 6.86 Chinese yuan.