Mainland Developers Get Cold Shoulder at Hong Kong IPO Roadshows
Chinese property firms are lowering their expectations about the amount of the money to be raised in the Hong Kong stock market.
By Zhang Yingguan and intern reporter Ci Bing 16 October 2009
(Caijing.com.cn) Five mainland property developers ready to launch initial public offerings in Hong Kong received a lukewarm response from investors because their assets were overvalued and IPO prices too high, sources close to investment banks said.
“Evergrande Real Estate Group Ltd. received subscription pledges worth about US$500 million, one-third of its financing target, with the proportion of investment from cornerstone investors significantly lower than expected,” an investment banker participating in the transactions told Caijing.
Another investment banker close to Evergrande said that the firm will press on with its plan to list, and has rehired UBS Securities as its sponsor to attract more investors.
Meanwhile, China Life and Ping An Insurance cut their proposed subscription quota in the Shenzhen-based Excellence Group by more than 50 percent, Caijing has learned.
Both Evergrande and Excellence Group plan to slash their IPO prices, according to the investment bankers.
Investors also shunned developers Fantasia Holding Group Co., Minfa Group and Xiamen Yuzhou Group, the sources said.
Investors have become more selective after Glorious Property sank below its IPO price on debut and Powerlong Real Estate cut its IPO price in early October.
However, a Hong Kong-based fund manager said that investors will still find developers with good-quality assets attractive.
“The market consensus is that the five developers are overvalued and their proposed IPO prices are too high, so investors are waiting for better opportunities, like Longfor Properties for instance,” a Hong Kong investment banker in said. Chongqing-based Longfor has submitted its IPO application and is waiting for regulatory approval.
Institutional investors still have significant funds available, but are preferring lower-risk opportunities, the banker added.
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Mainland Developers Get Cold Shoulder at Hong Kong IPO Roadshows
Chinese property firms are lowering their expectations about the amount of the money to be raised in the Hong Kong stock market.
By Zhang Yingguan and intern reporter Ci Bing
16 October 2009
(Caijing.com.cn) Five mainland property developers ready to launch initial public offerings in Hong Kong received a lukewarm response from investors because their assets were overvalued and IPO prices too high, sources close to investment banks said.
“Evergrande Real Estate Group Ltd. received subscription pledges worth about US$500 million, one-third of its financing target, with the proportion of investment from cornerstone investors significantly lower than expected,” an investment banker participating in the transactions told Caijing.
Another investment banker close to Evergrande said that the firm will press on with its plan to list, and has rehired UBS Securities as its sponsor to attract more investors.
Meanwhile, China Life and Ping An Insurance cut their proposed subscription quota in the Shenzhen-based Excellence Group by more than 50 percent, Caijing has learned.
Both Evergrande and Excellence Group plan to slash their IPO prices, according to the investment bankers.
Investors also shunned developers Fantasia Holding Group Co., Minfa Group and Xiamen Yuzhou Group, the sources said.
Investors have become more selective after Glorious Property sank below its IPO price on debut and Powerlong Real Estate cut its IPO price in early October.
However, a Hong Kong-based fund manager said that investors will still find developers with good-quality assets attractive.
“The market consensus is that the five developers are overvalued and their proposed IPO prices are too high, so investors are waiting for better opportunities, like Longfor Properties for instance,” a Hong Kong investment banker in said. Chongqing-based Longfor has submitted its IPO application and is waiting for regulatory approval.
Institutional investors still have significant funds available, but are preferring lower-risk opportunities, the banker added.
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