After cutting its offering size by 40 per cent and lowering the price, Guangzhou-based Evergrande Real Estate Group will only be able to pay off a fraction of its 9.69 billion yuan (HK$11 billion) in net debt after the listing.
Originally aiming to raise HK$16.5 billion, Evergrande had to postpone its listing on the Hong Kong stock exchange in March last year.
With an indicative price range of HK$3 to HK$4, the developer now hopes to raise up to HK$6.46 billion, of which 31 per cent will be used to repay a quarter of a US$500 million loan from Credit Suisse in 2007.
The rest of the money raised will mostly go to paying outstanding land premiums and financing projects such as an island site at the Yangtze's mouth in Qidong, Jiangsu province.
The company has been banking on the government's Shanghai-Chongming-Jiangsu connection project, which includes a plan to build an expressway to link Chongming Island with Qidong.
Evergrande will start construction on the Qidong site by the end of this year, and the bridge linking Shanghai and Chongming will be completed in 2012, according to chairman and executive director Hui Ka-yan.
Analysts are cautious about the developer, which will remain highly geared after its flotation.