HONG KONG (Reuters) - Evergrande Health Industry Group Ltd (0708.HK), a subsidiary of property developer China Evergrande Group (3333.HK), said it will buy 45 percent of new-energy vehicle startup Faraday Future, as part of the group’s diversification into high-tech sectors.
In a filing late on Monday, the healthcare company said it would buy all of Season Smart Ltd - which owns the 45 percent stake - for HK$6.75 billion ($860.15 million).
Season Smart in November agreed to pay $2 billion for the stake, and has paid $800 million to date. After the takeover, Evergrande Health will be required to pay the balance.
Faraday Future was founded by Jia Yueting, whose conglomerate LeEco is battling a cash crunch after a period of rapid expansion. The electric vehicle (EV) startup posted a net loss of $339.6 million in 2017.
Shares of Evergrande Health surged 40 percent in Tuesday morning, while Leshi Internet Information & Technology Corp 300104.SZ - LeEco’s core listed unit - jumped 10 percent. China Evergrande lost 0.2 percent but still overperformed property sector peers.
Evergrande Health said the deal would help it “obtain a strong competitiveness in the fast-growing new energy automotive industry, capture market share and diversify its businesses.”
The deal comes after parent China Evergrande in April said it would invest $16 billion in high-tech sectors.
To fund the deal, Evergrande Health said it will take out a three-year loan from China Evergrande at an interest rate of 7.6 percent.
($1 = 7.8475 Hong Kong dollars)
Reporting by Clare Jim; Editing by Christopher Cushing