AS CHINESE property developer Country Garden Holdings struggles under a mountain of debt, its venture capital arm is considering selling its stake in a chipmaker that may become a target of United States sanctions.
Country Garden Venture Capital is seeking about two billion yuan (S$380 million) for its undisclosed stake in ChangXin Memory Technologies (CXMT), according to sources familiar with the matter.
Country Garden, a major focal point in China’s real estate crisis, is scouring for capital to appease creditors after extending some yuan bond repayments last month. It is also facing a winding-up petition from a creditor in Hong Kong after failing to make payments on a loan worth about US$205 million plus interest.
Deliberations are ongoing and may not lead to a sale, according to the sources, who asked not to be identified discussing confidential information.
The sources also said that CXMT, as the Chinese chipmaker is known, is unlikely to attempt an initial public offering (IPO) until next year as it awaits more favourable conditions for a share sale.
CXMT had been seeking to list in Shanghai as early as 2023 at a valuation of 100 billion yuan or more, sources with knowledge of the situation told Bloomberg News at the time. While an IPO has not yet materialised, the company raised 10.8 billion yuan in a financing round in April from investors including Beijing-based GigaDevice Semiconductor.
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A representative for Country Garden Venture Capital declined to comment on this article. CXMT did not respond to requests for comment.
Bloomberg reported in March that the Biden administration was considering putting sanctions on CXMT and several other tech companies in an effort to restrict China’s development of advanced semiconductors. Founded in 2016, Anhui-based CXMT is one of the top Chinese makers of Dram storage chips and competes with the likes of Micron Technology and Samsung Electronics.
Just days ago, China set up its largest-ever semiconductor investment fund to support the industry’s development and make progress towards greater self-sufficiency. The central government and state-owned banks and enterprises piled 344 billion yuan into the investment vehicle known as Big Fund III, according to company registration aggregator Tianyancha.
Country Garden last month gained approval to extend coupon and principal instalment payments on three yuan bonds to September, Bloomberg reported, after it missed initial deadlines from Mar 12 to Apr 12. Country Garden, once China’s biggest developer by sales, defaulted on a US dollar bond in 2023.
With challenges mounting as Chinese home sales decline, Country Garden’s recent steps to ease its enormous debt load – total liabilities stood at 1.4 trillion yuan as at last year – include selling a stake in mall operator Zhuhai Wanda Commercial Management Group for about US$428 million in December.
Country Garden Venture Capital was founded in 2019 and focuses on areas such as technology, advanced manufacturing, real estate and health care, investing in more than 90 companies, according to its website. BLOOMBERG
