COFCO Corp., a Chinese state-owned company, will sell commercial properties to a Hong Kong-listed affiliate in exchange for shares, in a HK$14.2 billion ($1.8 billion) transaction that creates a larger entity and provides access to a broader pool of investors.
Hong Kong Parkview Group Ltd. (207), 69 percent owned by a unit of COFCO, will buy stakes in companies that hold assets in Chinese cities including Beijing and Chengdu, it said today in a filing to the Hong Kong stock exchange. It will sell as many as 2.3 billion shares to investors to raise funds for the purchase, Parkview said.
Chinese developers are looking for ways to get financing at lower costs as the government has been restricting their access to capital. Greenland Group, another state-owned enterprise, in August took a 60 percent stake in Hong-Kong-listed SPG Land Holdings Ltd. (2934) and placed a number of Chinese projects in the entity.
“Chinese developers are trying to list in Hong Kong,” said Alan Jin, a Hong Kong-based property analyst at Mizuho Securities Asia Ltd. “It can cut down their financing costs a lot. An initial public offering ‘‘would take a lot of time with high costs.’’
Shares of Parkview dropped 8 percent to HK$3.68 at the close of trading in Hong Kong. They climbed as much as 16 percent earlier. The Hang Seng Property Index ended the day 1.6 percent lower.
Parkview is majority owned by Achieve Bloom, which is indirectly wholly owned by COFCO Corp. Should investors not take up the shares offered, COFCO will receive stock that will give it 98 percent of Parkview, Parkview said in the statement. If investors do take up all the shares then COFCO will have a 75 percent stake in Parkview.
The expanded company ‘‘will become the overseas listed platform of COFCO Corporation, holding its mixed-use complexes as well as other commercial properties,’’ Parkview said.
COFCO Corp. is China’s largest grains trader and owns stakes in China Foods Ltd. (506), China Agri-Industries Holdings Ltd. (606) and China Mengniu Dairy Co. It owns shopping malls in cities including Beijing and Shanghai and hotels such as the St. Regis in Sanya, on China’s southern island of Hainan.
After the deal is completed, Hong Kong Parkview will change its name to COFCO Land Holdings Ltd. and will hold commercial properties in Beijing, Shanghai, Hong Kong and other Chinese provinces such as Sichuan and Hainan, it said.
China hasn’t approved refunding plans by developers listed on the Shanghai and Shenzhen exchanges since April 2010 in an effort to guard against a market bubble, according to an Aug. 2 report by Haitong International Securities Group Co.