Breaking news! Hillhouse Capital's first reduction of its stake in Gree Electric Appliances!

After six years, Hillhouse Capital’s fund Zhuhai Mingjun announces its first reduction of Gree Electric Appliances shares.

On the evening of February 25, Gree Electric announced that its largest shareholder, Zhuhai Mingjun, plans to reduce its holdings by no more than 111,702,774 shares (no more than 2% of the company’s total share capital excluding shares held in the repurchase account) through block trades within three months after the announcement, starting from 15 trading days after the disclosure date. The proceeds from the reduction will be used to repay bank loans.

The announcement also emphasizes that this reduction will not lead to a change in the company’s control, nor will it significantly impact the company’s shareholding structure or its ability to continue operations. According to relevant regulations, investors who acquire shares through block trades in this reduction are not allowed to sell within six months after the acquisition.

As of the close on February 25, Gree Electric was trading at 38.49 yuan, with a total market value exceeding 210 billion yuan. Based on the latest market value, the amount of this reduction is approximately 4.3 billion yuan.

The relationship between Zhuhai Mingjun and Gree Electric can be traced back to Gree’s mixed-ownership reform in 2019.

On December 3, 2019, Gree Electric announced that Zhuhai Mingjun accepted the transfer of 902 million shares of Gree Electric from Gree Group at a price of 46.17 yuan per share, totaling 41.662 billion yuan. Zhuhai Mingjun’s funds came from both its own capital and self-raised funds, roughly in a 1:1 ratio. Its own capital was contributed by five partners of Zhuhai Mingjun, totaling 21.85 billion yuan, while the self-raised funds came from bank loans. Since then, Zhuhai Mingjun has become Gree Electric’s largest shareholder.

At that time, Zhuhai Mingjun stated that to protect creditors’ interests, it promised to actively exercise shareholder voting rights at shareholder meetings involving dividends or to encourage its nominated directors to exercise voting rights at the board, aiming to ensure that the company’s annual net profit distribution ratio would not be less than 50%.

In recent years, Zhuhai Mingjun has maintained its position as the largest shareholder and has never reduced its holdings.

Market analysis suggests that the pledged shares of Gree Electric held by Zhuhai Mingjun will mature in December this year. Since Zhuhai Mingjun is a fund under Hillhouse Capital, its duration also aligns with the loan maturity date. Therefore, this reduction for debt repayment is a reasonable arrangement.

Data shows that when Zhuhai Mingjun acquired its shares in 2019, Gree Electric’s revenue was 198.153 billion yuan, with a net profit attributable to shareholders of 24.697 billion yuan.

In 2024, Gree Electric’s operating revenue is projected to be 190.038 billion yuan, with a net profit attributable to shareholders of 32.185 billion yuan.

In the first three quarters of 2025, Gree Electric’s operating revenue was 137.18 billion yuan, a year-on-year decrease of 6.5%; net profit attributable to shareholders was 21.461 billion yuan, down 2.27% year-on-year.

(Source: China Economic Net)