Evergrande backer eyes 23b yuan pullout

China Evergrande's (3333) largest investor is leaning toward demanding repayment of the 23 billion yuan (HK$26.5 billion) it invested in the debt-ridden developer, whose shares sank 17 percent after a share placement.

Investors linked to state-owned Shandong Hi-Speed Group can require to be repaid if Evergrande fails to get a long-delayed backdoor listing of its main real estate assets in China by January 31 next year.

The provincial State-owned Assets Supervision and Administration Commission, which has oversight of Shandong Hi-Speed, has balked at a deal concerned over possible losses, one of the people said.

Any agreement would require its approval.

Evergrande said it is in talks with the strategic investor about turning the investment into common equity.

This came after Evergrande raised HK$4.3 billion from a share placement priced at a discount of 14.7 percent to the stock's last close, which was far short of its target to raise over HK$8.43 billion.

The developer sold 260.65 million shares with a lock-up period of 90 days. Evergrande said it would mainly use the proceeds raised to refinance its debt.

Shares of the developer dived below the placing price of HK$16.50, closing at HK$16.06 yesterday.