Evergrande, property management unit seek HK$15.8b in IPO

Hong Kong

CHINA Evergrande Group and its property management arm are seeking to raise as much as HK$15.8 billion (S$2.74 billion) in a Hong Kong initial public offering of the unit, Evergrande Property Services Group Ltd said on Sunday.

The sale of 1.62 billion shares comprises 50 per cent new stock and 50 per cent so-called sale shares, with the price range set at HK$8.50 to HK$9.75 apiece. The offering size could be increased by as much as 15 per cent 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 per cent stake of Evergrande Property Services after the IPO. Those investors include SenseTime Group, a subsidiary of China Gas Holdings Ltd, and CCT China Merchant Buyout Fund, according to sources.

The cash raised would help Evergrande pare back a US$120 billion debt pile under a more stringent oversight of developers' fundraising activities by Chinese regulators. The nation's housing watchdog and central bank have asked some of the biggest developers including Evergrande to report their financing, debt and business data on the 15th of every month, Bloomberg News reported.

Evergrande owns about 72 per cent of the property services arm, according to the preliminary prospectus. Evergrande Property Services said on Sunday that 65 per cent of net proceeds will go towards acquisitions and investment, with the rest going into areas including technology upgrades and talent recruitment.

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. BLOOMBERG