Shares of China Evergrande Group’s electric-vehicle unit surged, fueled by optimism that some businesses may survive despite the property giant’s liquidation.
China Evergrande New Energy Vehicle shares jumped 86.8% to 71 Hong Kong cents (9 U.S. cents) on Monday after the EV startup said liquidators were in talks to sell a 29% stake in the unit to an unnamed buyer. The buyer would also have the option to purchase an additional 29.5% stake.
In addition, according to the terms of a nonbinding share-transfer agreement, the buyer will provide a line of credit to help develop the electric-vehicle business, Evergrande NEV said, without identifying the potential buyer. The potential transactions are subject to further due diligence, it said.
“Currently, the group is in severe shortage of funds,” the company, also known as Evergrande Auto, said. Its factory in Tianjin, which ceased production at the beginning of the year, has yet to resume production, it said.
The announcement also sent shares of China Evergrande’s property unit higher. Evergrande Property Services’ stock was 6.3% higher, bringing year-to-date gains to 73%.
The proposed cash injection will help Evergrande’s fledgling auto business, which also took a hit after a planned $500 million investment by a Dubai-based automaker didn’t materialize. Nasdaq-listed NWTN allowed the deal to lapse on Dec. 31 after a top Evergrande executive was put under investigation for suspected crimes.
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