HONG KONG/BENGALURU (Oct 30): Asia-focused investment firm PAG will acquire a 51% stake in Evergrande Property Services Group, a unit of debt-laden developer China Evergrande Group, for HK$4.03 billion (US$514 million), the two said in a joint announcement on Friday.

The acquisition marks a major step in liquidators' efforts to sell assets and recover funds for creditors of China Evergrande, which received a combined US$46 billion in creditor claims. Reuters reported in early October that PAG was in exclusive talks with the liquidators to buy a stake in the services unit.

The sale follows a competitive auction run by the liquidators, according to the filed announcement.

PAG said in the filing that Evergrande Property's business generated stable, recurring revenue from a diversified portfolio of managed properties across China.

PAG said taking control of the listed services unit would remove uncertainty tied to the liquidation of China Evergrande and CEG Holdings, and could strengthen market confidence.

PAG will fund the acquisition and the offer, if fully accepted, with acquisition financing and equity committed by PAG Fund IV, the filing said.

The offer values the 5.52 billion shares at HK$0.8359 each, a 29% discount to Evergrande Property's last closing price on Wednesday. The stock was suspended on Thursday pending the announcement and dropped 13.5% after trading resumed on Friday.

The offer values Evergrande Property Services at about HK$9.04 billion, compared to a market capitalisation of roughly HK$11.08 billion after the shares dropped to HK$1.025.

PAG will also pay 500 million yuan (US$75 million) at completion for certain taxes, transaction fees and other liabilities of CEG Holdings, according to the filing.

Following completion of the deal, PAG will be required to make an unconditional offer for the remaining 5.3 billion shares in the company.

Goldman Sachs is advising PAG on the acquisition and potential mandatory offer, while UBS and CITIC Securities are joint financial advisers to China Evergrande and CEG Holdings.

The deal remains subject to Chinese antitrust approval, among other conditions. The parties can terminate the agreement if these conditions are not met or waived by Feb 12, 2027, according to the filing.

China Evergrande, once China's premier property developer, defaulted on most of its US$300 billion in liabilities following Beijing's sweeping crackdown on the property sector six years ago.

The liquidators of China Evergrande and CEG Holdings informed Evergrande Property a year ago that they were seeking ‌to sell the 51.016% stake, according to the filing.

PAG intends to keep Evergrande Property listed in Hong Kong and does not plan major changes to its operations or workforce, apart from nominating new directors at the earliest time permitted under takeover rules, according to the filing.

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