Evergrande Property Services Stake Sale Collapses, Shares Plunge 24%
Talks to sell a controlling stake in Evergrande Property Services Group Ltd. have collapsed after liquidators of its bankrupt parent, China Evergrande Group, failed to reach a formal agreement with a prospective buyer, sending the company’s Hong Kong-listed shares down 23.5% to close at HK$0.78 ($0.10). The failed deal marks the second major attempt to sell the property management unit since 2021 and derails a key effort to monetize one of Evergrande’s few remaining healthy assets for creditor recovery.
Context
Evergrande Property Services has been one of the few bright spots within the collapsed Evergrande empire. With 601 million square meters under management, it trails only Country Garden Services and Poly Property Services in China’s property management sector. The company reported 2025 revenue of RMB 13.68 billion (~$2 billion), up 7.2% year-over-year, with net profit of RMB 987 million and cash reserves rising 55.3% to RMB 4.19 billion.
China Evergrande Group, once the country’s largest property developer by sales, was ordered into liquidation by the Hong Kong High Court in January 2024 after defaulting on massive liabilities estimated to exceed $300 billion. The company was formally delisted from the Hong Kong Stock Exchange in August 2025. Alvarez & Marsal were appointed as liquidators, tasked with monetizing assets for creditor recovery.
Key Developments
According to Caixin Global, Evergrande Property Services announced the termination of negotiations on June 25 under Hong Kong’s Takeovers Code (Rule 3.7). The selected bidder was Guangdong Provincial Tourism Holdings Co. Ltd. (广东旅控), a state-owned enterprise (SOE). A 30-working-day exclusive negotiation agreement had been signed on April 14, 2026, but expired on May 15 without extension.
A critical factor in the deal’s collapse appears to be a leadership vacuum at the buyer. Guo Dajie, party chief and chairman of Guangdong Provincial Tourism Holdings, was removed from his post on May 12 — during the exclusive negotiation period — and appointed head of the provincial culture and tourism department on May 29, leaving the chairman position vacant at a crucial juncture.
The company’s statement read: “The Company was informed by the liquidators that the negotiations between the potential seller and the potential buyer have been terminated, and the parties have not entered into any formal or legally binding sale and purchase agreement in respect of the potential transaction.”
Shares fell 23.53% on the day, with an intraday low of HK$0.74 — the weakest level since mid-June 2025. Total market capitalization dropped to approximately HK$84.32 billion, down from over HK$128 billion in April 2026.
This is the second time since 2021 that a sale of Evergrande Property Services has failed. As Sohu / China Real Estate News reported, a planned sale of a 50.1% stake to Hopson Development Holdings Ltd. for approximately HK$20 billion also fell through in late 2021.
Analysis
The failed sale carries significant implications for multiple stakeholders. For creditors of China Evergrande — including international bondholders, domestic suppliers, and homebuyers — the collapse represents a major setback in recovery efforts, as the property services unit was one of the most valuable assets available for distribution.
According to First Financial via Tencent News, CRIC Property Management noted that if Evergrande Property’s 2026 interim report maintains positive net current assets, the “material uncertainty related to going concern” warning in the audit report could formally disappear — which would be significant for the company’s valuation recovery, project expansion, and financing capability.
The involvement of a state-owned enterprise was seen as part of broader government-led efforts to stabilize China’s property sector by having SOEs acquire distressed assets. The removal of Guo Dajie in the middle of negotiations — for reasons not publicly disclosed — appears to have been a critical factor, leaving the SOE without its top decision-maker during the final stages of talks.
As Epoch Times reported, liquidators have indicated they will work with financial advisers to seek new buyers for the property unit. PAG (Pacific Alliance Group) and Trustar Capital (the private equity affiliate of CITIC Capital) have been mentioned as potential alternative buyers, having previously engaged with the liquidators.
What’s Next
Liquidators have confirmed they will continue seeking buyers for the 51.02% stake held by China Evergrande and CEG Holdings. The company’s improving fundamentals — including a return to positive net current assets and growing cash reserves — make it an attractive asset despite the failed sale. However, the repeated failures to find a buyer raise questions about valuation expectations and the complexity of executing such a transaction under liquidation proceedings.
The market will be watching closely for any signs of a new buyer emerging, as well as Evergrande Property’s interim results due later this year, which could determine whether the going concern warning is lifted — a development that could significantly enhance the company’s valuation and attractiveness to potential acquirers.