HKC lifts stake in Shanghai project
Property and energy investor HKC (Holdings) has increased its stake in a real estate project in Shanghai by buying an additional 15 per cent from the group's controlling shareholder, Indonesia's Widjaja family, for about 582 million yuan, according to sources.
To settle the transaction HKC would issue about 437 million new shares to the Widjaja family, lifting its stake in the group to about 64 per cent from 59.87 per cent, the sources said.
The HK$1.33 issue price of the shares is at an 11.33 per cent discount to the last traded price of HK$1.50 on Wednesday. Share trading of the group was frozen yesterday pending the release of a statement.
Last month, chief executive Eric Oei Kang, the grandson of 83-year-old Eka Tjipta Widjaja, whose family has invested 65 billion yuan in the mainland pulp and paper and property industries since 1989, said HKC's move was justified by the strong prospects of the Shanghai project.
The six billion yuan Shanghai project, which will be owned 25 per cent by HKC and the rest by the family after the deal, involves the development of a 65-storey, five-star hotel and office tower and a shopping mall with a gross floor area of more than 250,000 square metres. The project is located on the north side of the historic Bund.
Completion is expected before the opening of the 2010 Shanghai Expo.
Shanghai property prices have soared in the past two years and many analysts expect the trend to continue despite the government's macroeconomic measures designed to cool the market.
In addition to growing demand for office and hotel space, the attraction of the HKC-Widjaja project lies in its prime Shanghai location. Located beside the International Passenger Transportation Terminal in the Hongkau district, the project will be the first architectural landmark that visitors will see when entering the Huangpu River.
HKC, along with Sinar Mas Agro Resources and Technology, earlier this week entered into a memorandum of agreement with China National Offshore Oil Corp to invest in a US$5.5 billion biofuel project in Indonesia.
