Sun. Jul 14th, 2024

Country Garden is seeking an exit from Chinese chipmaker CXMT, Bloomberg reports

By Vaseline May31,2024

(May 31): As Chinese property developer Country Garden Holdings Co struggles with a mountain of debt, its venture capital arm is considering selling its stake in a chipmaker that could be targeted by U.S. sanctions.

Country Garden Venture Capital is seeking about two billion yuan (US$276 million or RM1.3 billion) for its undisclosed stake in ChangXin Memory Technologies Inc, according to people familiar with the matter.

Country Garden, a key focus in China’s real estate crisis, is looking for capital to satisfy creditors after extending some yuan bond repayments last month. The country is also facing a liquidation request from a creditor in Hong Kong after failing to pay a loan worth about $205 million plus interest.

Deliberations are ongoing and may not lead to a sale, said the people, who asked not to be identified discussing confidential information.

The people also said CXMT, as the Chinese chipmaker is known, is unlikely to attempt an initial public offering until next year as it waits for more favorable terms for a share sale.

CXMT was trying to list in Shanghai as early as 2023 with a valuation of 100 billion yuan or more, people with knowledge of the situation said. Bloomberg News at the time. Although an IPO has not yet taken place, the company raised 10.8 billion yuan in a funding round from investors including Beijing-based GigaDevice Semiconductor Inc. in April.

A representative for Country Garden Venture Capital declined to comment for this article. CXMT did not respond to requests for comment.

Bloomberg reported in March that the Biden administration was considering imposing sanctions on CXMT and several other technology companies in an effort to limit Chinese development of advanced semiconductors. Founded in 2016, CXMT is one of the top Chinese makers of DRAM storage chips, competing with the likes of Micron Technology Inc and Samsung Electronics Co.

Just days ago, China established its largest-ever semiconductor investment fund to support industry development and progress toward greater self-sufficiency. According to company registration aggregator Tianyancha, the central government and state-owned banks and enterprises have poured 344 billion yuan into the investment vehicle known as Big Fund III.

Country Garden received approval last month to extend coupon and principal payments on three-yuan bonds until September, Bloomberg reported, after missing initial deadlines of March 12 through April 12. Country Garden, once China’s largest developer by revenue, has defaulted on a 2023 dollar bond.

With problems mounting as Chinese home sales fall, Country Garden’s recent moves to ease its massive debt burden (total debt reached 1.36 trillion yuan last year) include selling a stake in mall operator Zhuhai Wanda Commercial Management Group Co for approximately $428 million. in December.

Country Garden Venture Capital was founded in 2019 and focuses on areas such as technology, advanced manufacturing, real estate and healthcare, investing in more than 90 companies, according to its website.

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