Powerlong pursues US$200m share offer
Developer Powerlong Group began pre-marketing for its US$200 million Hong Kong share sale yesterday to build up capital for expansion beyond its home base, sources said.
'The deal could be up to US$300 million, depending on the final pricing,' sources close to sponsors Goldman Sachs and Macquarie Securities said.
The deal comes after Central China Real Estate's attempt to raise HK$1.3 billion locally. The developer priced its shares at the low end with a 51 per cent discount to its net asset value for last year.
Powerlong is out to test the market. If everything came together, the formal roadshow would start next Thursday while trading was set for June 30 or July 1, sources said.
It has been a tough environment for mainland developers to raise funds in Hong Kong, with only one issue in the first half so far.
In March, lukewarm investor interest forced mainland developer Evergrande Real Estate Group to scrap an offering in Hong Kong that sought to raise up to HK$16.5 billion.
Powerlong develops residential, commercial and hotel projects in Fujian province and Wuxi, Jiangsu province. Also planned are six developments in Henan, Jiangsu, Anhui and Shandong provinces.
Response to the offer is mixed.
'I have no real interest in this initial public offering as there is no differentiation between Powerlong and its peers,' said one fund manager invited to the offering.
On the other hand, BOC International analyst Kitty Cheung found the Fujian property market 'better than those in inner provinces because Fujian people are quite wealthy'.
However, she added that the company's single-market focus would bring higher risk.
Whether retail investors liked Powerlong would depend on its financial standing, project quality and valuation, Ms Cheung said.
Given the prevailing sentiment, she said the stock would have to be priced at a 50 per cent discount to its net asset value to draw investors.
