China Fortune Land Development (CFLD) has announced to the Shanghai Stock Exchange that it will accept debt financing of up to ￥6 billion ($870 million) from Ping An Asset Management, the second-largest shareholder in the developer and a unit of financial giant Ping An Insurance.
The announcement comes just a month after CFLD chief Wang Xuewen announced at a staff meeting that the home builder is aiming to join the ranks of China’s top three developers.
CFLD is already the mainland’s biggest builder of industrial townships — industrial developments with attached residential areas and recreational facilities — but it also plans to expand its business scope into nursing homes, healthcare facilities, rental apartments, and a variety of commercial projects.
Ping An became a major shareholder of CFLD in July, paying ￥13.8 billion to purchase 19.7% of CFLD and putting it behind only the 42.7% stake in CFLD controlled by its parent, China Fortune Land Development Holding.
More than a dozen other major players in the mainland real estate market have also announced funding plans recently, even as financing costs have increased to a three-year high due to rising interest rates and a declining mainland economy. Evergrande, the country’s third-largest developer and its most indebted, issued two US dollar bonds in November, with interest rates of 11% and 13%, reflecting the risks of investing in the company.
Wang said that Ping An’s financial engagement with CFLD would help boost its fortunes, given Ping An’s stable finances and solid reputation. “When it comes to financing, in the past people wouldn’t even take a look at our projects,” Wang was reported to have said at the staff meeting. “Now, people want to increase their investments in our projects.”
Since the beginning of this year, CFLD and its affiliates have issued at least ￥17 billion worth of bonds. CFLD in the second half of the year issued a three-year corporate bond worth ￥1.3 billion at an interest rate of 7.4%, and other bonds totalling ￥5 billion. It has also raised $1.05 billion through the issuance of offshore bonds, with $850 million of that total issued during the second half of the year.
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