Shares in Sun Hung Kai & Co Ltd dropped sharply this morning after the company announced a HK$1 billion share placement to help boost the firm’s loan division.
Some 160 million shares were offered to institutional investors at HK$6.30 each, an 8.56 per cent discount to Thursday’s closing price. The news was not well received.
By lunch time on Monday, the stock price was down 10.7 per cent at HK$6.15. The Hang Seng Index was down 0.82 per cent in morning trading.
The money will be used to support the company’s “margin and term loan books” as well as grow the company’s mainland lending business, according to a written company statement. SHK is not related to the property developer.
In its latest interim report, SHK’s portfolio of bad debts rose 47.7 per cent year on year to HK$328.6m, which the company blamed on slowing growth in the world’s second largest economy. SHK had HK$16.9 billion in outstanding loans as of June 30th.
The group, which includes Sun Hung Kai Financial and consumer loans lender UA Finance, and boasts CVC Capital Partners and the Ontario Teachers’ Pension Plan as investors, is expanding rapidly in mainland China where it sees a market for wealth management services including consumer loans. Its flagship mainland lender, United Asia Finance Ltd, has 165 branches in 14 cities, as of July this year.