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Sunday, November 22, 2020, 18:57
Evergrande, unit seek about US$2b in Hong Kong IPO
By Bloomberg
Sunday, November 22, 2020, 18:57 By Bloomberg

The corporate flag for Hong Kong Exchanges & Clearing Ltd (HKEX), right, and the Chinese flag, left, fly outside the Exchange Square complex in Hong Kong, China, on Monday, Sept 16, 2019. (PAUL YEUNG / BLOOMBERG)

China Evergrande Group and its property management arm are seeking to raise as much as HK$15.8 billion (US$2.04 billion) in a Hong Kong Special Administrative Region (HKSAR) initial public offering of the unit, Evergrande Property Services Group Ltd said Sunday.

The sale of 1.62 billion shares comprises 50 percent new stock and 50 percent so-called sale shares, with the price range set at HK$8.50 to HK$9.75 apiece. The offering size could be increased as much as 15 percent to meet demand if an over-allotment option is exercised.

The Shenzhen-based company said it’s secured 23 cornerstone investors who agreed to subscribe for 789.5 million shares, a roughly 7 percent stake of Evergrande Property Services after the IPO

The Shenzhen-based company said it’s secured 23 cornerstone investors who agreed to subscribe for 789.5 million shares, a roughly 7 percent stake of Evergrande Property Services after the IPO.

ALSO READ: China Evergrande seeks up to US$1.09b in share placement

Those investors include SenseTime Group, a subsidiary of China Gas Holdings Ltd, and CCT China Merchant Buyout Fund, according to people familiar with the matter who are not authorized to speak publicly. The firms did not respond to requests for comment outside business hours.

Evergrande owns about 72 percent of the property services arm, according to the preliminary prospectus. Evergrande Property Services said in a statement Sunday that 65 percent of net proceeds will go toward acquisitions and investment, with the rest into areas including technology upgrades and talent recruitment.

ALSO READ: Evergrande 'gets HKEX nod' to spin off management unit

The IPO is part of a trend of the Chinese mainland’s developers spinning off management units in the HKSAR at a record pace. About US$4.59 billion has been raised through property management IPOs this year, overtaking 2019’s record US$3.26 billion, data compiled by Bloomberg show.

Huatai International Ltd, UBS Group AG, ABC International, CCB International, Citic Securities Co and Haitong International are joint sponsors of the offering.

In August, Evergrande raised US$3 billion by selling a stake in its property management arm to investors including Tencent Holdings Ltd. Companies linked to Citic Capital Holdings, the wife of billionaire mogul Joseph Lau and the family investment arm of New World Development Co billionaire Henry Cheng, are also among the pre-IPO investors.

Evergrande Property Services plans to market the offering from Nov 23-26, with pricing and allocation expected to be determined on Nov 26. Shares are set to begin trading Dec 2.

READ MORE: China Evergrande gets lifeline from strategic investors


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