GUANGZHOU, China, July 2, 2015 /PRNewswire/ -- Evergrande (HK.3333) announced on July 2 that the owned Guangzhou Evergrande Taobao Football Club Co., Ltd (hereinafter referred to as Evergrande Football) submitted the listing application to the National Equities Exchange and Quotations (NEEQ) and obtained the acceptance letter on July 1. An original report from Sina Leju follows.
Evergrande makes good on its property spin-off listing promise
To some, Evergrande Football, as an independent listed company via a spin-off listing from Evergrande to realize independent operation and sole responsibility for its own profits or losses, will help Evergrande to specialize in its core business and enhance profitability; Evergrande has made good on its promise to spin-off list new properties one by one to reduce the level of liability and accelerate the asset-light process.
International capital market offers higher estimation on the specializing enterprises than on the integrated enterprises. The spin-off listing of Evergrande Football provides a clearer business and investment concept and Evergrande will be offered higher estimation by the capital market.
After the spin-off listing of Evergrande Football, Evergrande's owner will be more clear, beneficial for the company to focus on the core business, and to realize specialized operation and fine management, and also beneficial for improvement in the operation efficiency and profitability. Research shows that spin-off can bring the excess earnings of 2%~3% to the parent company, which might be higher in China.
In addition, spin-off listing is regarded as an effective initiative to reduce the level of liability. Moody and JP Morgan also affirmed the effect of spin-off listing on reducing the level of liability. Spin-off listing of Evergrande Football will help optimize the capital structure and is expected to further reduce the level of liability, so that Evergrande can make good on the promise of "liability reduction".
Becoming the "First Asian Football Stock"
According to senior experts in the sports industry, there is no listed football club in the Asian football world.
The listing of Evergrande Football will overturn the operation tradition of the Super League Club, and Evergrande Football will become a pioneer in reforming and innovating the professional operation model of Chinese football. This listing application is a milestone in China's football history and even Asia, and allows Chinese football to enter the capital market for the first time. Evergrande Football will become the first Asian football club to go public, and be the "first Asian football stock".
The rise of Evergrande Football in recent years lays a good foundation for the listing application.
Evergrande Football ranks No.1 in Asia throughout the year in terms of club rankings, attendance, number of fans, attention, etc., and is the most successful and influential professional football club in China at present.
Likely to Impose a "Winner-Take-All" Agglomeration Effect
In fact, Evergrande Taobao Club has made full preparation for the entrance into the capital market.
On June 24, Evergrande Group increased the capital of the club by injecting into the club the most valuable assets of Evergrande Football School, i.e. all footballer assets, and providing the club with additional capital of 400 million yuan in cash.
After the capital increase, the shareholding ratio of the club has changed from 50%∶50% to 60% held by Evergrande Group and 40% held by Alibaba Group.
The valuation of the club has increased significantly compared to its 2.4 billion yuan value one year ago when Alibaba became a shareholder, and the club has become the first football club in Asia with a value of 10 billion yuan.
It is believed that as Evergrande Football's valuation already exceeded 10 billion yuan before the listing application and there is likely to be a "Winner-Take-All" agglomeration effect after its listing, by virtue of its strong brand and strength, bringing huge room for growth in future incomes, and hopefully resulting in a market capitalization of several dozen billion yuan.
According to comments in the football world, Evergrande Football will become bigger and stronger by virtue of the capital market, which will provide strong assurance for fulfilling its goal of becoming one of the top 20 clubs in the world.
"The listing application of Evergrande Football will have a significant demonstration effect in the reform and innovation of the Chinese football management system and operation model."
SOURCE Sina Leju