Renhe prices share offer below target range to raise HK$3.4b

Renhe Commercial Holdings, which develops underground shopping centres on the mainland, raised HK$3.39 billion from an initial public offering despite the gloomy market sentiment by fixing the offer price below the bottom of an indicative range.

The volatile market over the past weeks had cast doubts over the prospects of the deal, as many investors turned cautious and stayed on the sidelines.

The Hang Seng Index has lost 3,326.47 points since Renhe began its management roadshow on September 29. The index dived 676.31 points yesterday, extending its losses to 47.67 per cent this year.

'It has been very difficult but fortunately it is almost a done deal now,' a source said.

Renhe's share sale failed to receive enough orders to cover the retail portion, which was 10 per cent of the offering, but the shortfall would be picked up by additional institutional subscriptions, sources said.

However, the firm was forced to cut its share offer price to HK$1.13 from an indicative range of between HK$1.40 and HK$1.71.

At that pricing, the deal's size has shrunk almost 34 per cent from the initially targeted HK$5.13 billion. 'The firm had to make big compromises with investors if it really wanted to get listed under such bad market conditions,' said a fund manager.