Dividend increase aims to lower the net asset value of the developer before A-share public offering in the first half In an attempt to pave the way for an A-share issue in the first half of the year, Beijing North Star, the Hong Kong-listed developer of the capital's municipal government, has declared its highest dividend to date to lower its net asset value. Despite an 8.8 per cent drop in profit to 261.9 million yuan, the firm has declared a final dividend of 15 fen a share. With a special interim dividend of 10 fen, the payout amounts to 179 per cent, compared with the firm's normal dividend policy of 33 per cent to 50 per cent. Chief executive He Jangchuan said the high dividend was an exceptional move to lower the firm's net asset value, and the usual policy would be resumed after the listing. According to A-share listing rules, the issue price of an initial public offering must be higher than the firm's net asset value. At the same time, however, the A-share issue price also has to be in line with the firm's H shares trading in Hong Kong. In Beijing North Star's case, this rose 5 per cent to close at $1.89 yesterday. 'Our net asset value, according to mainland accounting standards, is about 2.30 yuan per share, but it will fall to about 2.15 yuan per share after we pay out the dividend,' Mr He said. The A-share listing, which was approved by the China Securities Regulatory Commission in March last year, involves the issue of up to 1.5 billion yuan-denominated shares on the Shanghai Stock Exchange and is estimated to raise about three billion yuan. The proceeds will be used mainly to support group projects, including those related to the 2008 Olympic Games. The listing was delayed after the central government halted the sale of state shares last year as part of nationwide austerity measures. 'If the issue fails this time, we will resort to other fund-raising methods, such as getting large loans from banks,' Mr He said. However, if it went ahead, the company would have about 20 billion yuan in working capital. 'Our net asset will be about 7.8 billion yuan, and we can borrow about 12 billion yuan,' Mr He said. Half the working capital will be put into property development, 30 per cent into retail operations and the remaining 20 per cent will be used for property investment. The firm has a working capital of about 7.9 billion yuan, of which 2.8 billion yuan is in loans. Mr He said the company wanted to diversify its development business to cities other than Beijing where there was intense competition and a shortage of land supply. He did not name the cities.