China Developer Sunac Raises $953 Million in Share Sale Combo

(Bloomberg) --

Sunac China Holdings Ltd. raised $953 million through the sale of new shares as well as a stake in its property management unit, the latest Chinese developer to seek funds amid an industry-wide liquidity crunch.

Sunac sold 335 million shares in a top-up placement that raised about $653 million, according to terms of the deal obtained by Bloomberg News. Separately, it sold 158 million shares in its property management arm Sunac Services Holdings Ltd. via a subsidiary to raise about $300 million. Both sales were upsized.

Sunac Services shares were sold at HK$14.75, a discount of 11% to Friday’s closing price, while Sunac shares were at HK$15.18, also at a discount of 11%, the terms showed.

China’s fourth-largest property company by sales has faced heightened market scrutiny over its financial health since a letter from a subsidiary to a local government seeking assistance surfaced in September. Sunac later denied requesting support. 

Debt woes at Chinese developers, including China Evergrande Group and Kaisa Group Holdings Ltd., have fueled investor concerns over the strength of even the nation’s biggest property firms. Soaring yields in the offshore bond market have made it tough for developers to roll over their debt, while falling home sales and prices have added to the gloom. 

Sunac is also planning to sell its vast culture and tourism business to raise much-needed cash, Bloomberg News reported on Friday. Property developers however have been struggling to offload assets as potential buyers in the sector hoard funds given falling home prices.

The Beijing-based developer met two of the “three red lines” metrics set by the Chinese government to cap leverage in the sector, with its 76% reading on liabilities to assets missing the 70% target. Companies have until mid-2023 to meet the guidelines. 

Morgan Stanley is sole bookrunner on both the top-up placement and the selldown in the property management firm.

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