August 4, 2016 / 10:28 AM / 4 years ago

China Evergrande buys 4.68 percent of larger peer China Vanke

The company logo of Evergrande Real Estate Group Ltd, the country's second-largest property developer by sales, is displayed at a news conference on annual results in Hong Kong, China March 29, 2016. REUTERS/Bobby Yip

HONG KONG (Reuters) - Property developer China Evergrande Group (3333.HK) said on Thursday it has bought an aggregated 4.68 percent of larger peer China Vanke Co Ltd (000002.SZ) on the secondary share market for 9.1 billion yuan ($1.37 billion).

The amount represents an average purchase cost of 17.63 yuan a share.

Vanke’s shares in Shenzhen jumped 10 percent to 19.67 yuan on Thursday after business magazine Caixin first reported the purchase during early afternoon trade.

Vanke (2202.HK), embroiled in a power struggle with financial conglomerate Baoneng and state-owned China Resources Group, has seen its share price shed over 30 percent to as low as 16.74 yuan since resuming trade early last month after a six-month halt.

“(Evergrand chairman) Hui Ka Yan has profited a lot from the secondary stock market in the past, there is a chance he may have bought Vanke shares as a financial investment,” said ICBC International analyst Li Xing Wen.

“He may expect upside in Vanke if he intends to hold the shares long term.”

Evergrande’s stake will pose little threat to Vanke’s management and major shareholders, Li said, as Baoneng and China Resources together already own over 40 percent of Vanke.

In June, Vanke announced a $6.9 billion deal with white knight Shenzhen Metro Group Co Ltd [SZMUNM.UL] that would make the subway operator its largest shareholder, while stakes held by Baoneng and China Resources would be diluted.

Reporting by Clare Jim

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