China Curbs Spur Hong Kong Property Share Sale Boom

(Bloomberg) --

Additional property offers have flourished in Hong Kong, as Chinese developers facing domestic funding curbs rush to sell shares offshore.

Real estate offers excluding IPOs have raised $3.1 billion this year, up 40% from the same period of 2018, according to data compiled by Bloomberg. With about two weeks to go, the annual tally is heading for a four-year high.

China has introduced tough restrictions on fund raising by developers, forcing them to reduce debt, as the government seeks to rein in home prices. Regulators allowed only one real estate firm to sell additional shares in the onshore market this year: Shanghai Lingang Holdings Corp. raised $694 million last month to develop a high-tech industrial park.

With developers turning to Hong Kong for funds, the property sector has become the top contributor to the city’s follow-on sales. Real estate stocks account for a quarter of the value of Hong Kong additional offerings this year, data compiled by Bloomberg show.

Recent property offers have met strong investor demand, as large developers are expected to post robust sales growth this year. Shares of Midea Real Estate Holding Ltd. jumped 4.9% Wednesday after raising about $99 million in a placement the night before. Its Wednesday close implied a 13% premium over the offer price.

Similarly, China Vanke Co.’s stock climbed for three straight days in Hong Kong after the company announced a $995 million placement on March 27.

A planned rights offering by Beijing Capital Land Ltd. will add to this year’s property deals. The developer plans to raise funds to repay debt.

UPCOMING LISTINGS:

• Poly Property Development
  • Hong Kong exchange
  • Size $598m
  • Listing Dec. 19
  • GF Capital, Huatai Financial, ABC International
• JS Global Lifestyle Company
  • Hong Kong exchange
  • Size $332m
  • Listing Dec. 18
  • Credit Suisse, Morgan Stanley, ICBCI
• Bangkok Commercial Asset Management
  • Thailand stock exchange
  • Size $869m
  • Listing Dec. 16
  • Trinity Securities, Kasikorn Securities, UBS
• OneConnect Financial Technology
  • New York Stock Exchange
  • Size $312m
  • Listing Dec. 13
  • Morgan Stanley, Goldman Sachs, JPMorgan, Ping An of China Securities
• CABIO Biotech Wuhan
  • Shanghai Star board
  • Size $106m
  • Priced Dec. 8; listing TBA
  • Guotai Junan Securities

More ECM situations we are following:

• EHang Holdings Ltd., one of several companies seeking to commercialize autonomous taxi aircraft, closed its first day of trading in the U.S. down one cent from its IPO price
• Genor Biopharma, backed by Hillhouse Capital, is planning an IPO in Hong Kong that could raise about $200m
• Haier Smart Home plans Hong Kong listing and will offer minority shareholders in Haier Electronics Group new stock for their shares in order to take it private: Reuters
• Ujjivan Small Finance Bank, backed by investors including Aberdeen Standard Investments and Monetary Authority of Singapore, rallied as much as 70% following India’s most-subscribed IPO this year
• Poly Property Development raised HK$4.67b from Hong Kong IPO after pricing at the top of the indicative range: IFR
• China’s securities regulator approved listing applications of Hunan Heshun Petroleum, Tongqinglou Catering, Hunan Xiangjia Animal Husbandry and Shanghai Golden Union Business Management

SEE ALSO:

• Asia ECM Weekly Agenda
• IPO data
• U.S. ECM Watch
• EU ECM Watch
• To receive the ECM Watch in your inbox daily, click the “subscribe” button at the top of this article

To contact the reporter on this story: Fox Hu in Hong Kong at fhu7@bloomberg.net

To contact the editors responsible for this story: Lianting Tu at ltu4@bloomberg.net, Margo Towie

©2019 Bloomberg L.P.