Sino Land, the city's seventh-largest developer by market value, is planning to raise as much as US$534 million hot on the heels of a share placement by rival Hang Lung Properties last week.
The developer plans to raise between US$518 million and US$534 million in a share sale at a 6.5 to 9.2 per cent discount to yesterday's closing price of HK$18.28, according to a term sheet. It is offering 242 million shares at HK$16.60 to HK$17.10 each. Goldman Sachs is the sole bookrunner of the sale.
The amount is far below Hang Lung Properties' HK$10.9 billion share placement but, according to one analyst, could be followed by a later share sale.
'They [the management of Sino Land] don't want to miss the chance of financing in a bull market,' the analyst said. 'So they will make a smaller placement first and then may follow up with another.'
He believes the proceeds will be used for land acquisitions to take advantage of the government's plan to release more sites for sale in the coming year.
Sino Land acquired two development sites and a serviced apartment project so far this year. The sites could provide a total gross floor area of more than 1.6 million square feet.
Sino Land has a land bank of 42 million sq ft. The developer said in its annual report that it would continue to selectively replenish its land bank in Hong Kong and the mainland.
Last Thursday, Hang Lung Group unveiled its plans to raise up to HK$10.9 billion for its property arm Hang Lung Properties through a share placement. It said it would sell about 293.9 million shares in the developer and subscribe to an equal number of new ones.
The placement represents 7.05 per cent of its existing issued share capital. The shares priced at a 6.8 to 8 per cent discount to the day's closing price. It was offering 269.4 million shares at HK$37.08 to HK$37.56 each.
The proceeds will be earmarked for expansion on the mainland. The developer has six new commercial projects, which require more than HK$30 billion in investment.
The analyst expects other developers such as Henderson Land Development and New World Development to seek capital through equity placements. 'More developers will consider raising funds by share placement if the market is booming and share prices reached their target,' the analyst said.
Sino Land shares dropped 1.72 per cent to close at HK$18.28 yesterday.Topics: Acquisition Equity Financing