Real estate firm Evergrande eyes March offering
Updated: 2008-02-26 07:18
By Amy Lam(HK Edition)
|
|||||||
Property developer Evergrande Real Estate may launch a roadshow for its Hong Kong initial public offering (IPO) early next month, sources said.
The Guangzhou-based firm kicked off its pre-marketing yesterday, a source told China Daily.
At the same time, potential investors are being invited to meet with analysts familiar with the company, according to another source, a fund manager who specializes in property investment.
The pre-marketing kickstart, which usually lasts one or two weeks, is often done to test investors' response to the IPO, and it usually suggests that a formal investor roadshow will soon be launched, the source said.
If that's the case, Evergrande could end up joining other new IPOs next month, such as those by China Railway Construction and Want Want.
The Guangzhou-based Evergrande, which focuses on residential projects, would sell at least 2 billion new shares (15 percent of the company) according to an investor-education note seen by China Daily.
Of those 2 billion shares, 90 percent would be allocated for institutional investors and 10 percent would be allocated to retail tranche. An over-allotment option of 15 percent will be exercised for retail investors, according to the note.
The company, which may trade under the code of 3333, is looking to raise funds to finance its outstanding land premiums, as well as its existing projects. It also plans to use the IPO proceeds to acquire additional land reserves and repay a part of the structured secured loan, according to the note.
No price range for the stocks has been set, but earlier media reports have said the company IPO is expected to raise $1 billion to $2 billion. No possible listing date has been set. The company got its IPO approval from the Hong Kong Stock Exchange in January.
Goldman Sachs, Credit Suisse and Merrill Lynch are jointly arranging the deal.
Sources familiar with the deal said they believe that market sentiment, while still down, has recovered a bit recently. That might favor the sale of new shares.
Evergrande is one of the leading large-scale property developers, with a combined land reserve in 22 Chinese cities that can be developed into more than 45.8 million sq m.
Evergrande used to focus its efforts solely on Guangdong province, but it has expanded to more than 15 second-tier cities, including Chongqing, Tianjin, Chengdu, Xi'an, Nanjing and Changsha.
Last year, eight mainland property firms raised a combined $7.6 billion in Hong Kong - seven times the total from 2006, according to data from Thomson Financial.
And mainland property IPOs have been hugely popular amid the home-building boom, fueled by the mainland's urbanization, a strong growth in the economy and a wealthier middle class.
However, a 15 percent drop in Hong Kong's benchmark Hang Seng Index this year - upon fears of a US recession - has caused a number of IPO hopefuls to postpone their deals.
Now, with the mainland government beefing up efforts to curb easy lending for property developers this year, property firms have to risk a choppy market to earn money needed to purchase more land reserves.
The $1.65 billion IPO by Beijing-based SOHO China Ltd was 169 times covered in its retail portion in October, 2007, but its shares are now down 15 percent from its offering price.
Country Garden, another Guangdong-based developer, was 255 times covered in its IPO's retail portion last April, but its shares dropped 50 percent from their record high in September.
(HK Edition 02/26/2008 page2)