Value Partners joins firms tapping market

PUBLISHED : Saturday, 16 October, 2010, 12:00am
UPDATED : Saturday, 16 October, 2010, 12:00am

Value Partners Group unveiled plans yesterday to raise HK$775.5 million through a share placement, joining a growing number of Hong Kong-listed companies that have capitalised on improving sentiment and recently come to market.

The locally listed asset manager said it would issue as many as 140 million new shares, representing 8.7 per cent of existing issued share capital. It earmarked about 90 per cent of the proceeds for growth purposes, including expanding its business across the border.

China Rare Earth Holdings announced after market close Thursday it had also struck a deal to sell new shares. It aimed to raise HK$455 million and said it would use the proceeds for general working capital.

'You have liquidity and good market sentiment and all this can help the market to do the share placements successfully,' said Linus Yip Sheung-chi, a strategist at First Shanghai Securities. 'It's a good time to do a share placement.'

The stock market was mostly stagnant in the first-half of this year as investors were sidelined by the prospect of a prolonged slowdown in Europe and the United States. Signs of stabilisation and speculation about further monetary easing have sparked a recent rally, however.

Hong Kong's benchmark Hang Seng Index has zoomed up 15.7 per cent since the start of September after slumping 6.1 per cent through the first eight months of the year. Main board trading turnover has supported the rebound, topping HK$100 billion in five sessions over the past six weeks.

Yip expected more companies this year will try to capitalise on the pick up in the market by doing share placements, particularly if they have an immediate need for the funds.

'Not all companies doing share placements just want to cash in,' he said. 'They may be looking for some future development in their company.'

China Everbright raised HK$2.3 billion through a share placement earlier this month. It planned to use the proceeds principally for developing its asset management platform and investment business.

Share prices for Value Partners and China Rare Earth tumbled yesterday following the share placement announcements. Value Partners dropped 7.7 per cent to HK$5.76. China Rare Earth fallen as much as 8.4 per cent before finishing down 3.9 per cent at HK$4.22.

Growth fund

Value Partners plans a placement of 140 million new shares

The company, which wants to expand its business on the mainland, intends to raise net, in HK dollars, $775m