Country Garden’s property management unit sees share price plunge after announcement of US$1 billion share sale
- Country Garden Services says it sold 150 million shares at HK$53.35 each, a discount of 9.5 per cent to the closing price on Wednesday
- The move comes as China’s developers face increasing levels of financial pressure amid a slowing real estate industry
Country Garden Services Holdings, the property management arm of Country Garden, sold 150 million shares at HK$53.35 each, according to a filing to the stock exchange. That was a discount of 9.5 per cent to the closing price of HK$58.95 on Wednesday, before the announcement.
“The property market is tough. Many developers basically want to sell their property management companies since they are quite valuable assets,” said Raymond Cheng, managing director at CGS-CIMB Securities. “Developers with financial difficulties would sell them.”
The company said it would use some of the proceeds for merger and acquisition deals.
There are about 15 property management companies currently considering IPOs, but they may now find it difficult to list because of weak market sentiment and valuations, Cheng said.
“For IPO, if the scale is too small, it may not be able to list because of low demand,” he added. “The pricing of the property management companies is cheaper than before. As the market is not good, it is hard to ask for a high price.”