By Clare Jim and Jing Xu

HONG KONG (Reuters) – Beijing is prodding government-owned firms and state-backed property developers such as China Vanke Co Ltd to purchase some of embattled China Evergrande Group’s assets, people with knowledge of the matter said.

Evergrande with $305 million in debts is on the verge of collapsing. According to six individuals, four of them in government or regulatory agencies, the central government won’t intervene in Evergrande’s rescue.

However, authorities hope that asset purchases can prevent or minimize any unrest that might occur in the event of Evergrande’s messy collapse. They declined to identify the subject because it is sensitive.

According to one source, a handful of state-owned businesses have conducted due diligence on Guangzhou’s assets.

Guangzhou City Construction Investment Group, a person with direct knowledge, is near to purchasing Evergrande’s Guangzhou FC soccer stadium and the surrounding residential developments.

Set to cost around 12 billion yuan ($1.9 billion), the stadium https://www.reuters.com/business/china-evergrandes-construction-guangzhou-soccer-stadium-proceeding-planned-2021-09-27 has been designed to seat more than 100,000, making it the world’s largest venue built for soccer by capacity.

According to a person familiar with the matter, Evergrande’s Guangzhou assets were “arranged” for “both political as well commercial reasons.” Authorities do not want only one company bidding on these assets.

Evergrande was not available for comment, nor did Guangzhou City Construction Investment Group. State assets regulator State-owned Assets Supervision and Administration Commission, (SASAC), did not respond immediately to inquiries for comment.

Sources said that Evergrande has asked Vanke and China Jinmao Holdings to buy Evergrande assets. One source also said that China Resources Land was being contacted.

Sources said that property developers as well as government-owned companies were contacted directly and indirectly regarding asset purchase. Reuters couldn’t immediately confirm the state of most of these talks.

Vanke, one-third of which is owned by Shenzhen’s subway operator state, stated in August that it had spoken with Evergrande to discuss cooperation on various projects. The company did not respond to Tuesday’s request for comment regarding the status of those talks. Jinmao, China Resources Land and China Resources Land did not reply to our requests for comment.

Evergrande failed to pay $83.5 million interest to offshore bondholders and still has a $47.5million coupon payment due Wednesday.

Although there are expectations that Evergrande will go through one of China’s largest restructurings, the government has remained silent about the possibility of a bailout and how it might handle a collapse.

Beijing has, however, worked to curb any ricochet effect on the financial system from Evergrande’s troubles, with the central bank pledging on Monday to protect consumers exposed to the housing market and injecting more cash into the banking system.

One of the first signs of an official inquiry into the real estate giant came this week when the Shenzhen government’s financial regulator said an investigation had been opened https://www.reuters.com/world/china/exclusive-china-evergrandes-wealth-management-arm-faces-local-government-inquiry-2021-09-27 into an Evergrande wealth management unit.

According to one person who has direct knowledge about local government involvement, local governments were asked to facilitate Evergrande’s asset sales and reorganisation.

Sources also stated that local governments’ actions will depend on Evergrande’s presence and financial stability in each province or municipality.

The sources also stated that Evergrande’s funding status will be assessed by regulators before any actions on Evergrande’s liquidity.

One regulatory source said that deciding on what type of committee to set up depends on how much debt is being held.