Coastal Ports News
- Sino-Ocean cashes in on land
Date: 12-Sep-2007 Sources: (Xinhua Online)
BEIJING, Sept. 11 -- Sino-Ocean Land Holdings Ltd, the property unit of China's biggest shipping company, is seeking as much as 11.9 billion HK dollars(1.5 billion U.S. dollars) in a Hong Kong share sale as real estate prices surge.
The developer of residential, office and commercial properties in the north China's Bohai Bay region will offer 1.55 billion shares, equivalent to a 36.6-percent stake, at 6.45 to 7.70 HK dollars apiece, according to two e-mails to fund managers, copies of which were given to Bloomberg News yesterday.
Och-Ziff Capital Management Group, a New York-based hedge fund manager, has agreed to buy 30 U.S. dollars million worth of the stock.
Property companies have raised 3.9 billion U.S> dollars in Hong Kong initial public offerings this year as housing prices in the Chinese mainland posted the fastest increase in almost two years. Rising household incomes, combined with borrowing costs that have failed to keep pace with inflation, are driving prices higher.
'The market still has a lot of interest in Chinese property stocks because the mainland is still lagging in real interest rates,' said Kenny Tang, a director of Tung Tai Securities Co in Hong Kong. 'Chinese property companies' profit margins remain at very high levels, indicating demand is still strong.'
Beginning the IPO as late payments on United States sub-prime loans sap international investor interest in risky assets, Sino-Ocean reserved a combined 240 million U.S. dollars of shares for 10 corporate investors, including Och-Ziff and Hong Kong billionaire Lee Shau-kee. Lee is chairman of Henderson Land Development Co, Hong Kong's fifth-largest builder by market value.
Hong Kong individuals ordered about 170 times the amount of shares initially set aside for them in the IPO of Franshion Properties (China) Ltd last month. Appetite for the sale held up even after concerns about rising defaults in the U.S. on mortgages to people with poor credit histories drove Hong Kong's benchmark index lower.
The property unit of Sinochem Corp, the nation's largest chemicals trader, raised 3.81 billion U.S. dollars in that share sale.
'Usually if the market is not stable, players will tend to subscribe for IPO stocks because the selling pressure is much smaller,' making them more likely to advance than stock in companies that are already traded, Tang said.
Housing prices in China's 70 major cities rose 7.1 percent in June from a year earlier, the fastest gain since August 2005, when the National Development and Reform Commission began collecting data on housing prices from 70 cities instead of 35, according to information on the agency's Website.
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