In a remarkable turn of events, Evergrande Auto has witnessed a significant surge in its stock price, with an impressive rise of approximately 49%. The stock currently stands at 44.4 Hong Kong dollars per share, resulting in a remarkable increase in market capitalization by around 130 billion Hong Kong dollarsDuring the trading session, its stock even saw a peak increase of over 60%, pushing its market value past 440 billion Hong Kong dollars at one point, though it currently sits at around 380 billion Hong Kong dollars.

The catalyst behind this substantial stock rally is the company's acquisition of a strategic investment amounting to 26 billion Hong Kong dollarsThis considerable influx of capital serves as a vital boost for Evergrande Auto, enhancing its competitive stance in the burgeoning electric vehicle (EV) sectorFurthermore, it alleviates concerns regarding the company's financial stability, which have plagued stakeholders for quite some time.

To understand the gravity of this strategic investment, we delve into its inception

On January 24, 2020, Evergrande Auto entered into a subscription agreement for a targeted placement with six strategic investorsThe agreed subscription price was set at 27.3 Hong Kong dollars per share, discounted by 8% based on the average closing price over the previous five trading daysThe placement involved the issuance of 952 million new shares, culminating in a total investment of 26 billion Hong Kong dollarsFollowing this capital injection, the new shares represent 9.75% of Evergrande Auto's equity post-expansion.

The six investors in this financing round comprise a mix of corporate and individual stakeholdersAmong them, four are institutional investors, each pledging 5 billion Hong Kong dollars for 183 million shares, while the two individual investors contributed 3 billion Hong Kong dollars each for approximately 110 million shares eachNotably, these transaction agreements are secured with a 12-month lock-up period, which serves as a testimony to their confidence in the company's growth trajectory

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Given the current valuation, these investors have already observed an unrealized profit of more than 60% on their investmentPost-financing, Evergrande Group remains the controlling shareholder, albeit its stake has slightly decreased from 74.95% to 67.64%.

The backgrounds of the six investors reveal intriguing insights about the support Evergrande Auto has garneredThe first of these is Chengyu Holdings, registered in the British Virgin Islands, and wholly owned by Chen Hua, a lesser-known figure outside of ShenzhenHowever, Chen is credited with founding the JinJi Group, known for its construction ventures, highlighted by the iconic JinJi 100 skyscraper that towers over Shenzhen’s skyline.

The second investor, Shangyu Limited, also registered in the British Virgin Islands, is owned by Huang GuangmiaoWhile unfamiliar to many, Huang’s corporation, Zhongzhou Group, is among Shenzhen’s most prominent real estate developers, capitalizing on the city’s rapid urban development.

The third investor, Heyi Rong International Trading Co., provides a striking contrast, as it lacks significant notoriety and was established only in 2017 with a registered capital of 50 million Hong Kong dollars

Though publicly listed personnel is limited to Yu Anfeng as its identified shareholder, a deeper dive reveals Wang Kaiguo as the actual controller, whose involvement in trade and private equity adds a layer of intrigue to Evergrande's investment landscape.

Meanwhile, Cuilin Global Investment is another BVI company at the table, controlled by Wang Zhongming, the chairman of Shenzhen Cuilin Investment Group, which manages assets worth 50 billion Hong Kong dollars and operates across the construction and agriculture sectorsThis connection brings forth a blend of construction prowess and agricultural investment into the EV equation.

The personal touch in this consortium is exemplified by the presence of MsChen Kaiyun and MrLiu Minghui, noted figures who are intrinsically linked to the wealth of Hong KongMsChen is the spouse of Liu Luanxiong, a name synonymous with real estate success stories in Hong Kong, while Mr

Liu is the founder of China Gas, a publicly listed entity that signifies stability in investment.

The faculty of real estate moguls diving into the electric vehicle market raises pertinent questionsWhy has there been a pronounced interest among real estate magnates towards an industry that seems quite distinct from their core business of property development?

Both real estate and automotive industries are recognized as cornerstone sectors within the Chinese economy, each boasting potential market values that soar into the trillions of Hong Kong dollarsReal estate focuses on housing while automotive focuses on mobilityHowever, the golden era of real estate appears to be waningWith urbanization rates surpassing 60% in China, the rapid growth seen in previous decades is decelerating, shifting the paradigm of real estate from a phase of scarcity to one of saturation.

Indicators illustrate the looming ceiling of 15 trillion Hong Kong dollars for the real estate market, with forecasters predicting that expansion prospects may become increasingly limited

The competition among property developers is intensifying, and even the leading firms account for no more than 5% of the total market shareA consolidation of dominance in the property sector is foreseen, where the top players might individually capture about 10% of the market share in forthcoming years.

As the real estate landscape faces these constraints, the automotive sector emerges as a frontier filled with prospectsParticularly, the current transition from traditional combustion vehicles to smart electric automobiles presents an appealing horizon for property developers contemplating diversificationIn the past year, capital inflows into the electric vehicle sector have accelerated, heralding exponential growth for companies such as Tesla, whose stock price has skyrocketed over tenfoldMoreover, Chinese brands like NIO and BYD have also capitalized significantly on this shift, underscoring a shared enthusiasm for this new frontier.

Yet, contrary opinions strike a note of caution; industry veteran Cao Dewang, chairman of Fuyao Glass, recently observed an existence of bubbles within the electric vehicle market