Shui On dusts off stalled IPO

Mainland developer eyes approaching interest rate peak as it mulls adding projects to avoid repeat of June postponement

Shui On Land, the mainland property developer that pulled its planned initial public offering in mid-June when it drew a tepid response from investors, will try again as early as next month, according to market sources.

The firm, headed by property tycoon Vincent Lo Hong-sui, hopes to raise as much as US$800 million to US$1 billion, sources said, about the same as the HK$5.88 billion to HK$7.96 billion it sought initially.

The company is betting that interest in its IPO will be bolstered by the growing belief among investors that global interest rates are nearing a peak.

Shui On Land resubmitted its listing application to the stock exchange on Monday, according to a statement to the exchange filed yesterday by Shui On Construction and Materials (Socam), which owns 29.3 per cent of the property firm.

The developer, which has focused heavily on Shanghai, is expected to come back to market with exactly the same assets it planned for the original IPO, even though Mr Lo had said it was considering adding other projects to boost its appeal.

JP Morgan, Deutsche Bank and HSBC are arranging the share sale.

The revival of Shui On Land's IPO could signal that other postponed property-related sales might come back to life, including Henderson Land Development's proposed US$500 million Sunlight real estate investment trust.

Although the prospect of stable interest rates would clearly be a boon for property-related share sales, analysts fret that the central government's efforts to cool the overheated property market might offset that gain in the eyes of many investors.

'Market conditions in China for the property sector have become a lot tougher in recent months as a result of the government austerity measures,' Standard & Poor's credit analyst Jacphanie Cheung said.

'Major risks for property developers are weakening demand, tight bank funding and evolving government policies.'

Shui On Land's June offering included six projects with a gross floor area of 6.8 million square metres which were at various stages of development in Shanghai, Hangzhou, Chongqing and Wuhan.

One of Shui On Land's biggest and best-known mainland developments is the Taipingqiao project in Shanghai, a huge, mixed-use complex with a gross floor area of more than one million square metres.

It is in the Luwan district and includes the popular Xintindi commercial project.

A Shui On Land spokeswoman declined to comment on the details of its revised IPO plan.

In its last attempt, Shui On Land was offering 1.054 billion shares at HK$5.60 to HK$7.55 each to raise up to HK$7.96 billion.

It originally planned to make its debut on June 23 but sluggish orders from investors prompted management to call off the deal on June 15.

Shares of Socam gained 2.94 per cent to close at HK$14 yesterday.

BACK ON THE MARKET

Assets to be included in Shui On Land's IPO

Shanghai Square metres (m)

Shanghai Taipingqiao 1.1

(City-core development project)

Shanghai Rui Hong Xin Cheng 1.1

(Intergrated residential development project )

Shanghai Knowledge and Innovation Community 0.5

(City-core development project)

Chongqing Square metres (m)

Chongqing Tiandi 2.6

(City-core development project)

Wuhan Square metres (m)

Wuhan Hankou Tiandi 1.4

(City-core development project

Hangzhou Square metres (m)

Hangzhou Xihu Tiandi 0.1

(Existing retail and entertainment complex)