A crane with the China Vanke logo at a residential construction site in China, on Sept. 28, 2021.
Qilai Shen | Bloomberg | Getty Images
Major property developer China Vanke said on Thursday it had raised 3.92 billion Hong Kong dollars ($499 million) in a share placement in Hong Kong, in the primary test of investor appetite towards a mainland developer share sale in 2023.
State-backed Vanke said in a filing that it sold 300 million shares at HK$13.05 per share, versus their offer price range of between HK$12.93 to HK$13.20 apiece, in keeping with the term sheets of the deal launched on Wednesday and seen by Reuters.
The pricing was at a 6.12% discount to Vanke’s Wednesday close of HK$13.90.
Vanke shares fell as much as 5.3% to HK$13.16 early on Thursday, but narrowed losses to three.7% by noon, versus a 0.5% fall within the Hang Seng Mainland Properties Index .HSMPI.
The Shenzhen-based developer said it intended to make use of 60% of the proceeds to repay its outstanding overseas debt financing, and the remainder to replenish working capital.
It added it should not use the proceeds for brand spanking new domestic residential development projects.
Vanke has $971 million and $650 million dollar notes due in April and May, respectively, in keeping with Refinitiv data.
China’s property sector has since mid-2021 been grappling with a liquidity crisis, with many developers defaulting on or delaying debt payments as they struggle to sell apartments and lift funds.
Vanke, seen by the market as a superb quality developer, is amongst those with the most important onshore credit lines in place.
It has received approval to issue around 30 billion yuan ($4.35 billion) notes recently and is planning to sell as much as 15 billion yuan latest shares in Shenzhen, where it’s dual-listed.
JPMorgan said Vanke’s placement, while not a “total surprise,” got here sooner than expected since it is in a blackout period prior to earnings announcement.
“We consider Vanke might need desired to benefit from the present window to put H-shares first, especially before a possible wave of placements in 2Q23,” the investment bank said, adding it expected more equity-raising within the sector.
JPMorgan noted Vanke’s placement price was one in every of the narrowest amongst recent such sales, where the typical discount was 12%-13%, and that it didn’t think the position hinted Vanke was in distress as its financing activities have been smooth.
Vanke’s share sale represented 13.6% of its enlarged H shares and a couple of.51% of its enlarged total share capital, including each shares issued in Hong Kong and Shenzhen.
CLSA and Citi are the placing agents of the share sale.
