Li Ka-shing's flagship group, Cheung Kong (Holdings), has called off plans to spin off its extended-stay hotel units into a separate listing, highlighting the grim outlook for capital raisings.
Horizon Hospitality, the IPO hopeful, originally planned to raise as much as US$800 million by listing four hotels that provide a combined 4,833 suites with a gross rental area of 3.32 million square feet. If successful, the company was expected to offer an annual gross yield of 7 per cent under a trustee-manager structure, according to two people familiar with the deal. Cheung Kong spokeswoman Wendy Tong Barnes said there was no concrete [listing] plan to be announced at this stage, but "the company is also considering other options" than going public.
According to sources familiar with the deal, a key investor meeting last week was abruptly cancelled for unknown reasons; but the poor demand for new shares amid valuation concerns was thought to be the reason for the holdup.
Separately, Lifestyle, the operator of SOGO department stores in Causeway Bay and Tsim Sha Tsui, said on Friday it planned to spin off its Hong Kong and China property unit on HKEx.