Chinese developer in via the back door
Landsea pays HK$863m for two-thirds stake in listed HK company Shenzhen High-Tech to give it access to international capital markets
Shares in Shenzhen High-Tech Holdings trebled in price briefly yesterday after the company announced that it had become a back-door listing vehicle for a mainland developer engaged in "green" residential property development.
Shenzhen High-Tech, dubbed a "Qianhai concept stock", as it owns a commercial building near the special economic zone in Shenzhen, said Landsea Group would buy a nearly two-thirds stake in the firm from its chairman, Richard Wong Chung Tak, for HK$863.1 million.
The stock surged to an intra-day high of HK$1.25 when it resumed trading at 1pm yesterday, before closing at 90 HK cents, up almost 120 per cent from the last trading day on June 7. The company had suspended trading on June 10 pending the announcement.
Kenny Tang Sing-hing, general manager of AMTD Financial Planning, said: "More mainland developers are looking for Hong Kong-listed firms as targets for back-door listing. Listing in Hong Kong gives mainland firms a platform to tap international capital markets. Mainland private developers will encounter difficulties in financing amid the austerity measures and credit crunch aimed at cooling the property market."
Tang said given that any sizeable mainland property project easily required at least 10 billion yuan in investment, he believed more mainland developers to follow suit. The announcement said Wong had agreed to sell 1.26 billion shares, 63.4 per cent of the issued share capital of the firm, to Landsea for 68.5 HK cents a share.