Evergrande EV unit cancels listing, suffers cash crunch

The company has significant private equity backing, having raised HK$4 billion ($516 million) from the likes of Tencent Holdings, Sequoia Capital China, Yunfeng Capital, and Didi last year. They came in at a price of HK$22.65 per share. As of early afternoon trading on September 28, the stock was at HK$2.18.

NEV is exploring ways to introduce new strategic investors and address what it described as a "serious shortage of funds."

“In light of the adverse effects on the liquidity of the group, there were delays in payments to suppliers and construction fees which resulted in the suspension of work... there is no material progress on the resumption of certain projects despite the group’s efforts,” the company added in a filing.

Its parent has become the world's most indebted real estate developer - with more than $300 billion in outstanding liabilities, most of it due to mainland creditors - and potentially China's largest-ever debt restructuring.

Evergrande failed to make an $83.5 million payment on one of its US dollar-denominated bonds due on September 24. The prospect of a default - the company has 30 days to settle up before one is officially triggered - has rocked public equity and debt markets as investors worry about broader weakness in China's property sector.

Evergrande entered the electric vehicle market with the acquisition of Sweden-based NEVS. Its approach differs from the likes of Nio, Xpeng and Li Auto in terms of scale. While they typically deliver one new model every couple of years, Evergrande released six at once in August 2020.

NEV claims that its factories are based on an industry 4.0 automation framework and equipped with more than 2,500 robots. In 2019, Jiayin Xu, chairman of Evergrande, announced plans to reach an annual production capacity of one million units. He said NEV could become the world's largest new energy vehicle group within five years.

At an auto show in April, NEV displayed nine new models. Attendees were forbidden to touch or walk close to the vehicles, prompting local media speculation that these were effectively shells with no chassis.

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• Topics
• Greater China
• IPO
• Restructuring
• China
• IPO
• Distress
• automobiles
• Tencent
• Sequoia Capital
• Didi Chuxing
• Yunfeng Capital