Shenzhen Investment : Announcements and Notices - Major Transaction Capital Contribution to Hengda Real Estate Group Company Limited Third Supplemental Investment Agreement

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

(Incorporated in Hong Kong with limited liability)

Reference is made to the First Announcement in relation to the entering into of the Principal Investment Agreement (as amended and supplemented by the First Supplemental Investment Agreement) among the Subsidiary (an indirect wholly-owned subsidiary of the Company), Kailong Real Estate and Hengda Real Estate (both are subsidiaries of China Evergrande), pursuant to which the Subsidiary has agreed to contribute an amount of RMB5.5 billion to the capital of Hengda Real Estate in return for approximately 2.0522% of the enlarged equity interest in Hengda Real Estate.

Reference is also made to the Second Announcement in relation to the entering into of the Second Supplemental Investment Agreement among the Subsidiary, Kailong Real Estate, Hengda Real Estate and Mr. Hui (a director and controlling shareholder of China Evergrande), pursuant to which the parties thereto agreed to amend the terms of the Principal Investment Agreement (as amended and supplemented by the First Supplemental Investment Agreement) in relation to exit rights of the Subsidiary as disclosed in the First Announcement under the section headed "The Investment Agreement - Exit rights".

Reference is also made to the announcements of the Company dated 12 June 2017 and 28 September 2017 respectively in relation to the grant of waivers from strict compliance with Rule 14.41(a) of the Listing Rules and with such waivers, it was disclosed that the Company expects to dispatch the Circular on or before 24 November 2017.

The Board announces that on 6 November 2017 (after trading hours), the Subsidiary entered into the Third Supplemental Investment Agreement with Kailong Real Estate and Hengda Real Estate. The Third Supplemental Investment Agreement amends certain terms of the Amended Investment Agreement, with an intention to align the terms of the Amended Investment Agreement with those of the investment agreements entered into among Hengda Real Estate, Kailong Real Estate, Mr. Hui and the Third Round Investors.

Pursuant to the Third Supplemental Investment Agreement, the parties thereto agreed to amend the terms of the Amended Investment Agreement in relation to the Performance Undertaking Amounts, and dividend payment prior to and after the entering into of the Reorganisation Agreement as disclosed in the First Announcement under the section headed "The Investment Agreement

- Performance undertaking and indemnity". Save for the amendments contained in the Third Supplemental Investment Agreement, all other terms and conditions of the Amended Investment Agreement remain unchanged.

The key amendments to the Amended Investment Agreement pursuant to the Third Supplemental Agreement are summarised as follows:

Under the terms of the Third Supplemental Investment Agreement, Kailong Real Estate and Hengda Real Estate have undertaken to the Subsidiary that, subject to what is mentioned below, the Performance Undertaking Amounts of Hengda Real Estate for the financial year of 2017, 2018 and 2019 will not be less than RMB24.3 billion, RMB50 billion and RMB55 billion, respectively. The Performance Undertaking Amounts of Hengda Real Estate for the financial years ending 31 December 2018 and 2019, however, are to be finally determined with reference to the valuation report issued by a valuer with relevant securities and futures industry qualifications and approved by the relevant authorised State-owned assets supervision and administration commission, in relation to the valuation of the equity interests of all shareholders of Hengda Real Estate as at 30 June 2017 but in any event will not be less than RMB30.8 billion and RMB33.7 billion (being the amounts previously agreed and provided in the Amended Investment Agreement), respectively.

Reference is made to the protective measures regarding dividend payment prior to the entering into of the Reorganisation Agreement under the Amended Investment Agreement as disclosed in the First Announcement and, in particular, the formulae disclosed in the First Announcement under the section headed "The Investment Agreement - Performance undertaking and indemnity - Dividend payment prior to the entering into of the Reorganisation Agreement" (the "Formulae"). In view of the addition of the Third Round Investors mentioned above, and thus the total number of investors will be increased, consequential changes have been made to the relevant provisions of the Amended Investment Agreement.

Pursuant to the Third Supplemental Investment Agreement, provision has been added to clarify that "all of the investors" for the purposes of the Formulae means all of the First Round Investors, the Second Round Investors and the Third Round Investors, and the parties thereto have also agreed that the requirement that payment of dividend is "subject to such payment not adversely affecting the ability of Hengda Real Estate to continue to operate" be changed to "subject to Hengda Real Estate continues to operate normally". Other than these amendments, there is no change to what is disclosed in the First Announcement under the section headed "The Investment Agreement - Performance undertaking and indemnity - Dividend payment prior to the entering into of the Reorganisation Agreement".

Pursuant to the Third Supplemental Investment Agreement, Kailong Real Estate has accepted new obligations which were not provided for in the Amended Investment Agreement and which requires it, following the completion of the Proposed Reorganisation, to propose and vote for Listco's distribution of at least 68% of its distributable net profit for each of the financial years under the Performance Undertaking Period to its shareholders as cash dividends, in accordance with terms as follows.

Following completion of the Proposed Reorganisation, on condition that Listco maintains the ability to continue to operate normally, and that there is no breach of the laws of the PRC, the constitutional documents of Listco and its dividend distribution system, after the end of each financial year during the Performance Undertaking Period, Kailong Real Estate will propose that Listco distribute a cash dividend of at least 68% of its distributable net profit for such year, and for any other year within the Performance Undertaking Period when cash dividend has not been paid in accordance with the arrangement mentioned under this section or the section headed "Dividend payment prior to the entering into of the Reorganisation Agreement" above (as the case may be). Furthermore, Kailong Real Estate will vote in favour of such dividend proposal at the relevant shareholders' meeting of Listco.

The First Supplemental Investment Agreement has lapsed upon the taking effect of the Third Supplemental Investment Agreement after it is signed by the parties thereto. The First Supplemental Investment Agreement sets out the provisions regarding dividend payment prior to the entering into of the Reorganisation Agreement, and such provisions have been substituted by the provisions set out in the Third Supplemental Agreement which reflect the terms after making the amendments summarised under the section headed "The Third Supplemental Investment Agreement - Dividend payment prior to the entering into of the Reorganisation Agreement" above.

The Third Supplemental Investment Agreement was entered into with an intention to align the terms of the Investment Agreement with those of the third round investment agreements entered into among Hengda Real Estate, Kailong Real Estate, Mr. Hui and the Third Round Investors. Pursuant to the revised terms of the Investment Agreement, the Performance Undertaking Amounts may be more than what had previously been agreed, and additional measures have been built in with a view to ensure that the amount of dividend payment following completion of the Proposed Reorganisation as agreed under the Investment Agreement will be given effect to. As such, the Directors are of the view that the terms of the Third Supplemental Investment Agreement and the transactions contemplated thereunder are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

To the best of the knowledge, information and belief of the Directors, having made all reasonable enquiries, Kailong Real Estate, Hengda Real Estate and their ultimate beneficial owners are third parties independent of and not connected with the Company or its connected persons.

As no Shareholder is interested in the Investment Agreement and the transactions contemplated thereunder (including the Capital Contribution) and thus no Shareholder is required to abstain from voting if the Company were to convene a general meeting for the approval of the Investment Agreement and the transactions contemplated thereunder (including the Capital Contribution), and the Company has already obtained written approvals of the Investment Agreement (including the Second Supplemental Investment Agreement and the Third Supplemental Investment Agreement) and the transactions contemplated under the Investment Agreement (including the Capital Contribution) from Shum Yip Holdings, a Shareholder holding 4,809,035,399 Shares (representing approximately 60.37% of the issued share capital of the Company). Pursuant to Rule 14.44 of the Listing Rules, the Company is exempted from the requirement to obtain Shareholders' approval of the Investment Agreement and the transactions contemplated thereunder (including the Capital Contribution) at a general meeting.

The expected dispatch date of the circular of the Company in relation to the Investment Agreement remains to be on or before 24 November 2017.

In this announcement, the following expressions shall have the meanings set out below unless the context requires otherwise:

"Amended Investment Agreement"

the Principle Investment Agreement as amended and supplemented by the First Supplemental Investment Agreement and the Second Supplemental Investment Agreement

"Board" the board of Directors

"Capital Contribution" the contribution of RMB5.5 billion to the capital of Hengda Real

Estate by the Subsidiary pursuant to the terms of the Investment Agreement

"China Evergrande" China Evergrande Group, a company incorporated in the Cayman

Islands, the shares of which are listed on the Main Board of the Stock Exchange

"Company" Shenzhen Investment Limited, a company incorporated in Hong

Kong with limited liability, the shares of which are listed on the Main Board of the Stock Exchange

"connected person" has the meaning ascribed to it under the Listing Rules "controlling shareholder" has the meaning ascribed to it under the Listing Rules "CSRC" the China Securities Regulatory Commission

"Director(s)" the director(s) of the Company