Swire Group

Swire to list property unit despite market slump

PUBLISHED : Friday, 23 September, 2011, 12:00am
UPDATED : Thursday, 07 May, 2015, 4:04pm

Swire Pacific yesterday stunned the market by reviving its plan to spin off its property arm at a time when several high-profile initial public offerings were shelved because of poor market conditions.

To avoid selling shares at a discount, Swire is adopting a different strategy. In a filing to the stock exchange, it said: 'The listing would be by way of introduction.'

Under the listing plan, it will distribute about 17 per cent of its shares in Swire Properties - 10 per cent to shareholders of Swire Pacific and 7 per cent to controlling shareholder John Swire & Sons.

'It is not intended that Swire Pacific should sell or that Swire Properties should issue any Swire Properties shares in conjunction with the listing,' the statement said.

'Given that the method of introduction does not involve selling new shares, it will not be affected by the current market sentiment as the shares of Swire Properties will be given to our shareholders free,' said a Swire spokeswoman.

The new spin-off bid comes after a market downturn forced the company to shelve a listing in November 2009 that was intended to raise HK$20.84 billion.

'The listing of Swire Properties is our long-term strategic plan as it will provide a platform for the group to tap the equity market to fund future property investment,' the spokeswoman said.

Swire has enough capital for its current funding requirements after selling Festival Walk for a record HK$18.8 billion last month.

Swire announced last month underlying profit for the first half plunged 48.3 per cent to HK$4.6 billion because of a sharp fall in contributions from Cathay Pacific Airways.

Between now and 2014, it would spend HK$10.75 billion on property development, it said.

Jonas Kan, the head of research at Daiwa Capital Markets, said the new listing method would help Swire avoid selling the subsidiary at a lower valuation in a turbulent market.

'It will also give shareholders a chance to realise the value of Swire Properties. The price of Swire Properties shares will be determined by the market when they start trading in future,' he said.

At least four companies have dropped their listing plans this week, including the HK$737 million offering of Shanghai chain Xiao Nan Guo Restaurants Holdings.