[Asia Economy Reporter Kim Hyung-min] Major foreign media outlets reported on the 7th that Huarun Zijie, a Hong Kong real estate company and a major shareholder of Evergrande, a Chinese real estate developer engulfed in bankruptcy rumors, has decided to go private.
According to foreign media, Huarun Zijie, a Hong Kong Stock Exchange-listed company, announced on the afternoon of the 6th that the Liu Lianshuang family, which holds 75% of the company's shares, would purchase the remaining 25% of shares currently circulating at HKD 4 per share and delist the company. The total purchase amount is HKD 1.91 billion (approximately KRW 289.2 billion).
Huarun Zijie's stock price surged more than 30% intraday on the day, fueled by the announcement the previous day. Trading of Huarun Zijie shares had been suspended since May 29 and resumed on this day.
Due to concerns over investment losses from the decline in Evergrande's stock price, Huarun Zijie's stock price had fallen by 42% this year before the trading suspension. Huarun Zijie estimated that if it sells all its Evergrande shares as planned this year, the investment loss would amount to HKD 10.41 billion (KRW 1.5762 trillion).
In the announcement made the previous day, Huarun Zije stated that delisting would reduce costs and management resources associated with maintaining the listing and provide greater flexibility for long-term business strategies.
Meanwhile, Huarun Zije purchased a 6.5% stake in Evergrande between 2017 and 2018 at an average price of HKD 15.8 per share, maintaining the position of the second-largest shareholder after Evergrande Chairman Xu Jiayin for some time.
However, as Evergrande became embroiled in bankruptcy rumors due to debt default, Huarun Zije began selling its Evergrande shares and currently holds only a 4.39% stake.
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