China stock market

New York-listed SouFun latest mainland firm to seek a listing back home

Higher valuations and more active trading the main lures

PUBLISHED : Wednesday, 04 May, 2016, 8:47pm
UPDATED : Wednesday, 04 May, 2016, 8:47pm

More overseas-listed mainland firms are pondering a return to the Shanghai or Shenzhen stock exchanges in search of higher valuations and more active trading, with New York-listed SouFun the latest to seek a back-door listing at home.

On Wednesday, the firm released more details about the proposed acquisition of a majority stake in Shanghai-listed storage-battery manufacturer Chongqing Wanli New Energy through an asset and share swap.

Analysts see the move as a back-door listing by Soufun, China’s biggest real estate website provider, following in the footsteps of other mainland players,

Such companies will get a higher valuation on the mainland, where they have established household names
Kenny Tang, Jun Yang Securities

“Such companies will get a higher valuation on the mainland, where they have established household names,” said Kenny Tang Sing-hing, chief executive at Jun Yang Securities.

They had previously gone aboard to tap the international capital market to raise funds at lower cost, he said.

“Today, the A-share market is also serving as an active fundraising channel for listed firms such as those issuing yuan-denominated bonds to finance future expansion,” Tang said.

David Hong Shing-kei, head of research at China Real Estate Information, said he expected to see more mainland companies shift their listings to Shanghai or Shenzhen.

“Their return may also be triggered by the thin trading in overseas stock exchanges,” he said.

Chinese tycoon Wang Jianlin’s Dalian Wanda Commercial Properties may seek a back-door listing on the Shanghai stock exchange if it does not get regulatory approval to launch a planned initial public offering there soon, Reuters reported.

The next Wanda? Evergrande is behaving like it plans to delist in Hong Kong and head for Shanghai

The company, with a market capitalisation of HK$33.4 billion, is planning to de-list from Hong Kong just 15 months after its stock market debut, unhappy with its share performance and preferring to place its bets on an upcoming Shanghai listing, after submitting an application last year.

Dalian Wanda Commercial declined to comment on the back-door listing proposal.

Last month, Hong Kong-listed Evergrande, China’s second-largest home builder, said it would take over Zhejiang-based state-owned developer Calxon by purchasing 52.78 per cent of its total shares for 3.6 billion yuan (HK$4.3 billion).

The developer also bought a 5 per cent stake in Shanghai-listed developer Langfang Development, while its subsidiary Evergrande Life increased its stake in Shenzhen Bauing Construction, listed in Shenzhen, to 6.25 per cent.

Just how much is China’s richest man willing to pay to delist Wanda Commercial from Hong Kong?

Evergrande’s strategy has sparked market speculation the developer will follow Wanda Commercial Properties in seeking a mainland listing.

A Soufun spokesman said New York would remain the firm’s primary listing.

“We just plan to have a dual listing in Shanghai and will not delist in the US,” he said. “Our business is largely on the mainland and it is logical for us to return to the mainland stock exchanges.”

Chongqing Wanli said in a filing with the Shanghai stock exchange it would use shares worth 16.2 billion yuan to buy SouFun assets through its units.

In addition, Wanli would raise 3 billion yuan through private placements to fund operations. The proposal is pending regulatory approval.

Shares of Wanli rose by the 10 per cent daily limit to 36.40 yuan after they resumed trading in Shanghai on Wednesday. They had been suspended since August.