Facebook’s Zuckerberg to Sell 41.35 Million Shares in Offering
Li Ka-Shing’s Yuan IPO Is Said to Raise $1.6 Billion at Low End of Range
Billionaire Li Ka-shing’s real estate investment trust raised 10.5 billion yuan ($1.6 billion) in Hong Kong’s first initial public offering denominated in the Chinese currency, two people with knowledge of the matter said.
Hui Xian Real Estate Investment Trust sold 2 billion units at 5.24 yuan apiece, the low end of a range marketed to investors, said the people, who declined to be identified before an announcement. The REIT will have a forecast yield of 4.26 percent, based on pricing assumptions presented in the company’s share sale document.
The prospect of yuan appreciation wasn’t enough for Li, 82, to raise the maximum amount sought as other REITs traded in the city offer higher yields and investors can open bank accounts in China for similar returns. Individuals applied for about 2.5 times the stock reserved for them, the people said, compared with 300 times for the last REIT Li took public in Hong Kong more than five years ago.
“People can bring their money to mainland China and achieve a similar yield through time deposits,” said Nelson Yan, who helps oversee $90 million as investment manager at Mayfair Pacific Financial Group in Hong Kong.
REITs tend to trade less actively than other stocks as investors hold them for their yield, making them less attractive to retail buyers seeking quick gains, Yan said.
China’s central bank has raised interest rates four times since October as it tries to cool a property bubble and tame inflation.
The interest rate is 3.25 percent on a one-year deposit and 4.15 percent on a two-year deposit in mainland China. In Hong Kong, the return on a one-year deposit of at least 500,000 yuan ($76,700) at HSBC Holdings Plc (HSBA) is 0.6 percent.
Most of the real estate investment trusts listed in Hong Kong yield 5 percent to 6 percent, according to Jonas Kan, head of Hong Kong research at Daiwa Securities Capital Markets. Among Hong Kong-listed REITs, Sunlight Real Estate Investment Trust is estimated to yield 6.8 percent this year, while Champion REIT may return 4.6 percent, according to Katie Chan, an analyst at Haitong International Securities Group Ltd.
Winnie Cheong, a Hong Kong-based spokeswoman for Li’s Cheung Kong (Holdings) Ltd., didn’t immediately respond to phone calls made to her office. BOC International Holdings Ltd., Citic Securities International Co. and HSBC managed the sale.
The city’s yuan-denominated deposits reached a record $52 billion in February. Hui Xian’s IPO may pave the way for other developers to make similar offerings as Hong Kong Exchanges & Clearing Ltd. seeks to widen its product range to compete in the region.
The offering is backed by the Oriental Plaza properties which cover 100,000 square meters (1.1 million square feet) along the Changan Avenue in central Beijing. Oriental Plaza consists of eight premium office towers, a shopping mall, a Grand Hyatt Hotel and serviced apartments, according to its website. Cheung Kong owns 33.4 percent of Oriental Plaza, while affiliate Hutchison Whampoa Ltd. (13) holds 18 percent, according to the companies’ 2009 annual report.
Companies from Baar, Switzerland-based Glencore International AG to Prada SpA of Milan plan share sales in Hong Kong this quarter, providing impetus to the exchange’s push to become a global IPO hub.
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