Two of China’s biggest real estate developers confirmed plans to raise cash by selling shares, the latest funding efforts following the government’s easing of a clampdown on the debt-laden sector.
(Bloomberg) — Two of China’s biggest real estate developers confirmed plans to raise cash by selling shares, the latest funding efforts following the government’s easing of a clampdown on the debt-laden sector.
China Vanke Co. will raise $499 million in a Hong Kong share placement, its first in the Asian financial hub since 2020. State-run Poly Developments & Holdings Group Co. said the Shanghai stock exchange is reviewing its plans announced in December for an onshore private share sale of as much as 12.5 billion yuan ($1.8 billion).
The moves come amid a thawing of fund-raising conditions for Chinese developers as the government tries to stem an unprecedented housing slump. China’s property market is showing early signs of picking up, with new-home prices halting declines in January and sales rising for the first time in 20 months in February.
As part of a sweeping sector rescue late last year, China ended a ban on onshore equity fundraising for property developers and widened a program to facilitate local bond sales with government guarantees. Still, access to financing is largely limited to the stronger players, with defaulted firms including China Evergrande Group still shut out of capital markets.
Vanke, China’s second-largest developer by sales last year, agreed to issue 300 million new H-shares at HK$13.05 apiece, according to a statement to the Hong Kong stock exchange. That’s a discount to Wednesday’s closing price of HK$13.90.
Shares of Vanke declined as much as 5.3% to HK$13.16 on Thursday morning in Hong Kong. Poly slid as much as 1.3% in Shanghai.
Vanke aims to use the proceeds to repay debt and replenish working capital. In February, it amassed the equivalent of $2.2 billion through a placement on the mainland, the largest onshore additional share sale by a Chinese developer since authorities reopened the equity market for the sector last year.
The Hong Kong placement “could help ease an offshore debt maturity hump this year,” Bloomberg Intelligence credit analysts including Daniel Fan wrote in a note. That includes $971 million of 4.1% bonds due in April and a $650 million floating-rate note in May.
Poly Developments is seeking to sell no more than 819.1 million A-shares to as many as 35 investors, a statement to the Shanghai exchange showed. The proceeds will help it reduce its asset-liability ratio and cut interest expenditure.
–With assistance from Emma Dong.
(Updates with shares in the sixth paragraph)
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