Cinda IPO receives US$1.1 b share pledge
Group of 10 cornerstone investors eye slice of bad-debt manager's US$2.5 billion HK float; while property trust also seeks US$300 million
A group of 10 investors, including Norway's sovereign wealth fund and Och-Ziff Capital Management Group, have committed to buy about US$1.1 billion into China Cinda Asset Management as part of its Hong Kong initial public offering, people familiar with the matter said yesterday.
Cinda, one of China's four managers of bad debt, is seeking to raise US$2.5 billion and has attracted interest from distressed debt investors, hedge funds to China's insurance giants. Together, the so-called cornerstone investors would buy about 45 per cent of the offering, which is set to be Hong Kong's biggest this year.
Norges Bank Investment Management, the world's biggest sovereign wealth fund, has pledged about US$150 million to the offering, its biggest cornerstone commitment, one person familiar with the matter said.
The offer has generated an additional US$5 billion from anchor investors, the person added. Pricing of the Cinda offer is set for December 4.
China Life Insurance and Och-Ziff Capital are each committing US$200 million, while Temasek Holdings' unit Farallon Capital Management has agreed to buy US$100 million, people familiar with the matter said. Oak Tree, the world's largest investor in distressed debt, is pledging about US$53 million, while Ping An Insurance is committing US$75 million to the IPO, they added.
Other cornerstone investors in Cinda include, Shangdong Guotou, with a US$60 million pledge; Chinese fund manager Rongtong, with US$100 million; another long-only fund manager Haixia (US$100 million); and Yudean (US$50 million).
Cinda will offer shares in an indicative range of HK$3 to HK$3.58 each, equivalent to a price-to-book ratio of 1.1 to 1.3 times for this year. Chinese banks listed in Hong Kong trade at an average of 1.2 times, according to Thomson Reuters data.
Separately, Spring Reit will offer shares at HK$3.81 to HK$4.03 per unit per share, or an annual yield between 4.94 per cent and 5.23 per cent this year.
The average passing rent at Spring's China Central Place was 268 yuan (HK$339) per square metre in the first six months this year, compared with spot market rents in the Beijing central business district of 410 yuan per square metre.
The management said yesterday that rental income will rise as most contracts are due for renewal in the next three years.
A Credit Suisse research report indicated that the yield would rise to 6.9 per cent to 7.3 per cent next year on estimated rental income. The current occupancy rate is 96 per cent.
Toshihiro Toyoshima, chairman and non-executive director of Spring Asset Management, said the company will look for acquisition opportunities in Beijing, Hong Kong, Macau, Taiwan and Japan. Toyoshima is the chief executive of AD Capital, the reit manager and a joint venture between Development Bank of Japan and the Japanese government's investment arm, Asuka Asset Management.
