Vanke among three major Chinese property developers that are a step closer to selling shares under Beijing’s ‘three arrows’ rescue plan

Vanke, Poly Developments & Holdings and China Merchants Shekou Industrial Zone Holdings are leading smaller developers in the new A-share placements process so far

“If A-share placement plans are approved by regulators, ‘it would help to reduce their asset-liability ratios and … shore up market confidence towards the real estate sector’, Fitch executive says

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A residential construction site in Beijing. At a time when so many industry players need capital, large and important ones are likely to be given preference, so that regulators can restore confidence in the industry, an analyst says. Photo: Reuters

Published: 4:10pm, 24 May 2023Updated: 8:05pm, 24 May 2023

Three major Chinese developer have moved a step closer to raising funds in the country’s capital market after Beijing restarted equity financing for the property sector late last year.

China Vanke, the country’s second-largest developer by sales, was notified by the Shenzhen Stock Exchange on Friday that its A-share placement application had been received by the exchange for further processing, the company said on Monday. It has applied to sell no more than 15 billion yuan (US$2.1 billion) worth of shares in what could be the largest onshore shares sale – if approved – since the restart of equity financing for property firms.

Vanke joins Poly Developments & Holdings and China Merchants Shekou Industrial Zone Holdings, China’s largest and sixth-biggest developers, respectively, in pursuing new A-share placements. About 30 developers have applied for share placements since last November and these firms are leading smaller developers in the process so far.

Poly Developments aims to raise 12.5 billion yuan while China Merchants Shekou plans to raise as much as 8.5 billion yuan from as many as 35 investors, according to separate statements from the Shanghai exchange in January and Shenzhen exchange in February. These developers replied to enquiries by regulators separately last Tuesday and are now awaiting further processing as well.

“If their A-share placement plans are approved by China’s regulators, it would help to reduce their asset-liability ratios and control interest expenditure, and shore up market confidence towards the real estate sector,” Chloe He, director of Asia-Pacific corporate ratings at Fitch Ratings, told the Post on Wednesday.

The share placement plans by Vanke, Poly Developments and China Merchants Shekou come after Beijing introduced its “three arrows” rescue measures late last year, allowing property firms listed in China to issue bonds and raise funds in the onshore market after a period of six years.