Thid undated photo shows an advertisement for China Vanke Co Ltd in the Shenzhen Metro. (PHOTO / XINHUA)
HONG KONG / SYDNEY – Major property developer China Vanke Ltd said on Thursday it had raised HK$3.92 billion ($499 million) in a share placement in Hong Kong, in the first 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, according to the term sheets of the deal launched on Wednesday and seen by Reuters.
JP Morgan said Vanke's placement, while not a "total surprise", came earlier than expected because it is in a blackout period prior to earnings announcement
The pricing was at a 6.12 percent discount to Vanke's Wednesday close of HK$13.90.
Vanke shares fell as much as 5.3 percent to HK$13.16 early on Thursday, but narrowed losses to 3.7 percent by noon, versus a 0.5 percent fall in the Hang Seng Mainland Properties Index (HSMPI).
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The Shenzhen-based developer said it intended to use 60 percent of the proceeds to repay its outstanding overseas debt financing, and the rest to replenish working capital.
It added it will not use the proceeds for new domestic residential development projects.
Vanke has $971 million and $650 million dollar notes due in April and May, respectively, according to Refinitiv data.
Vanke, seen by the market as a good quality developer, is among those with the largest 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 up to 15 billion yuan new shares in Shenzhen, where it is dual-listed.
JP Morgan said Vanke's placement, while not a "total surprise", came earlier than expected because it is in a blackout period prior to earnings announcement.
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"We believe Vanke might have wanted to take advantage of the current window to place H-shares first, especially before a potential wave of placements in 2Q23," the investment bank said, adding it expected more equity-raising in the sector.
JP Morgan noted Vanke's placement price was one of the narrowest among recent such sales, where the average discount was 12-13 percent, and that it did not think the placement hinted Vanke was in distress as its financing activities have been smooth.
Vanke's share sale represented 13.6 percent of its enlarged H shares and 2.51 percent of its enlarged total share capital, including both shares issued in Hong Kong and Shenzhen.