China Resources Land Ltd. is seeking to raise as much as $1.26 billion in a Hong Kong share sale to fund land acquisitions and developments.
The company will offer 380 million shares at HK$25.25 to HK$25.65, a discount of 5.52 percent to 7 percent to the last close on May 11, according to a term sheet obtained by Bloomberg.
Chinese developers are looking for cash to catch a market recovery as the government moves to support a flagging property sector that is a drag on economic growth. China lowered down-payment requirements for some homebuyers at the end of March, before cutting interest rates for the third time in six months effective Monday.
“Big developers must increase land reserves while they can, as the cost of purchasing land would only climb in the future,” said Liu Feifan, an analyst at Guotai Junan Securities Co. “A share sale now would make sense, as share prices of developers appear strong against the backdrop of policy easing.”
An index tracking Shanghai-traded developers has jumped 127 percent since Sept. 30, when the People’s Bank of China eased mortgage policies for some second-home buyers, reversing four years of property curbs.
China Resources Land’s shares were suspended on Tuesday. They climbed 1.9 percent to close at HK$27.15 on Monday, extending this year’s rally to 33 percent.
Chinese developers may tap the rally to raise more capital, which “should be positive for the sector unless developers were to aggressively use the proceeds for further landbank acquisitions,” Barclays Plc analysts led by Hong Kong-based Alvin Wong wrote in a report Monday.
A 35 percent jump this year in the benchmark Shanghai Composite Index, spurred by government stimulus, has attracted other companies to offer shares to investors to raise money. Fosun International Ltd., which also develops properties, said this week it is seeking $1.2 billion in a share sale, while China Taiping Insurance Holdings Co. said last week it was raising $1.7 billion in a private placement.
“Within the next six months, we’ll probably see more share sales by Hong Kong-listed Chinese developers,” Liu said.
China International Capital Corp. is among banks arranging the sale.
— With assistance by Fox Hu