Zhong An planning HK$2b spin-off
Cash squeeze prompts mainland developerto float commercial development unit
Zhong An Real Estate, which is facing a cash squeeze, plans to spin off its commercial development and investment business unit, China New City, in a HK$2 billion global offering.
The plan had yet to be approved by shareholders, who would meet on May 30, and details including the size of the global offering and the price range had yet to be finalised, the mainland developer said in a statement to the Hong Kong stock exchange yesterday.
The latest wave of spin-offs … reflects the credit squeeze in China
It follows similar recent moves by other developers, including Fantasia, to separately list its property management subsidiary - Colour Life Services.
"The latest wave of spin-offs by mainland property firms reflects the credit squeeze in [mainland] China, where policymakers are expected to relax home purchase restrictions and ease credit to spur growth," said Ben Kwong Man-bun, a director and head of research at KGI Asia. "Investors will be very selective when the property developers start pitching their share sales as maturities in property trusts will peak this summer."
The moves by Zhong An and other developers follow a decision by Hopewell in June last year to indefinitely suspend the spin-off of Hopewell HK Properties, after demand soured due to a sell-off in global equity markets.
Zhong An shares jumped 5.7 per cent to HK$1.85 yesterday.