Shanghai-listed developer Poly Real Estate announced on Tuesday it would raise 10 billion yuan in a private placement to finance expansion and reduce indebtedness.
The plan comes on the heels of indications of supportive government policy from Premier Li Keqiang on Sunday to help the struggling property sector, which is vital to ensuring the targeted 7 per cent growth for China this year.
State-owned Poly said it would issue 1.15 billion new shares to no more than 10 investors for at least 8.74 yuan a share. Its controlling shareholder Poly Group would commit up to 1.5 billion yuan, the developer said in a stock exchange filing. Poly Real Estate shares gained 1.65 per cent on Tuesday morning to 9.88 yuan.
As China relaxes its restrictions against the property sector, Poly said it would like to “optimise capital structure to cope with future changes and grasp opportunities during the process of industry consolidation”, citing data from consultancy CRIC that the market share of top 20 developers rose to 23 per cent last year from 15 per cent in 2011.
Premier Li told reporters at a press conference that “China’s urbanisation is accelerating and the housing demand is rigid … We encourage residents’ self-use and upgrade housing demand, and will keep a stable and healthy development in the real estate market”.
His remarks intensified expectations that policymakers would roll out more supportive measures to help rein in the correction in the real estate sector. So far regulators have relaxed fundraising restrictions for developers and cut interest rates twice since November.