China’s Country Garden to raise HK$6.295 billion by issuing shares to Ping An

PUBLISHED : Wednesday, 01 April, 2015, 10:19pm
UPDATED : Wednesday, 20 June, 2018, 4:44pm

Country Garden, the mainland’s No 6 developer in sales, will raise HK$6.295 billion by issuing news shares to Ping An Insurance (Group) Company of China so it will become the developer’s second largest shareholder, Country Garden announced in a stock exchange filing on Wednesday.

Ping An agreed to subscribe to 2.24 billion of new shares of Country Garden at HK$2.816 per share, representing 9.9 per cent of the enlarged share capital of the company. The biggest chunk of shares are controlled by the family represented by vice-chairwoman Yang Huiyan at 53.6 per cent. Yang is the daughter of Country Garden chairman Yeung Kwok Keung.

Ping An pledged it will not sell the shares for one year.

The company said the partnership with Ping An “will strengthen the group’s competitiveness in the property industry… and expand market share.” The directors also consider the share issuance would expand its capital base which the company expected to use the fund as a general working capital.

The new share issue price represents a discount of 10.03 per cent from the close on Tuesday of HK$3.13. It is also a discount of 6.16 per cent to the average share price over the last 10 trading days. Trading in the shares were suspended on Wednesday and they will resume trading on Thursday.

Chief financial officer Wu Jianbin said in an interview with South China Morning Post last September that he intended to halve the developer’s funding cost in the next two years to 4-5 per cent.

To do that, it needs to improve current credit ratings by a notch to investment grade.

The first step it did was a HK$3.2 billion rights issue last year, the first Hong Kong-listed mainland developer to do so amid a property market correction.

By the end of last year, the group’s net gearing ratio was 59.7 per cent, down from 67.3 per cent a year earlier. Its weighted average borrowing cost was 8.16 per cent, down from 8.54 per cent a year ago.

It reported a 20.1 per cent annual rise in profit attributable to owners last year to 10.23 billion yuan.

The company has a 10.5 per cent US$400 million note maturing in August via a syndicated loan, after tapping offshore lenders last year to raise HK$4.5 billion at interest rate of 4.7 per cent per annum.

The company last month redeemed an 11.125 per cent US$900 million note maturing in 2018 by issuing a five-year note at 7.5 per cent in February.