Temasek Holdings

Temasek selling Greentown stake to cash out of mainland property

PUBLISHED : Friday, 31 August, 2007, 12:00am
UPDATED : Friday, 31 August, 2007, 12:00am

Temasek Holdings, the investment arm of the Singapore government, is raising HK$1.3 billion from the sale of its entire stake in mainland property firm Greentown China Holdings, a term sheet sent to investors shows.

Temasek is divesting all of its publicly disclosed exposure to the mainland property market, even as analysts tip already buoyant real estate prices will continue to gain.

Temasek will sell 82.9 million shares, representing a 5.4 per cent stake in Greentown, for between HK$16.10 and HK$16.40 a share, according to the term sheet. The shares closed at HK$17.40 yesterday.

Greentown shares have gained 20 per cent this year, surpassing the 17.6 per cent rise in the Hang Seng Index.

Temasek bought into Greentown at its 2006 initial public offering at HK$8.22 each.

Selling the shares at the highest end of the indicative range would net Temasek HK$678 million on its investment, or a 99.5 per cent gain.

Temasek's 5.4 per cent stake made it Greentown's fourth-largest shareholder, a position now taken over by US private equity firm Warburg Pincus, which holds 5 per cent.

Greentown chairman and founder Song Weiping is the largest shareholder with a 32 per cent stake, followed by chief executive Shu Bainian, who holds 25 per cent, and Lehman Brothers with 7 per cent.

Temasek raised HK$951 million in November when it sold down its stake in Hopson Development Holdings. The fund had held 75 million shares, or a 5.9 per cent stake.

The investment vehicle is cashing out at a peak for mainland real estate.

'The mainland property sector will continue to outperform because demand cannot be met by supply,' said Christina Ngai, an analyst at Sun Hung Kai Financial. 'Developers have announced continued growth in the first half, proving the sector's strength.'

Daiwa Institute analyst Stone Shi expects mainland property plays to hit record highs by year-end on earnings momentum and the yuan's appreciation.