Greater Bay Area’s biggest property services firm Excellence Commercial said to seek up to U$400 million from Hong Kong IPO
- Shenzhen-based billionaire Li Hua joins rival units of Sunac and China Evergrande with Hong Kong stock offering
- Total revenue of property management services in Greater Bay Area is forecast to grow to 17.4 billion yuan by 2024, from 12.6 billion yuan in 2019
Excellence Commercial Property and Facilities Management Group is looking to raise between US$300 million (HK$2.33 billion) and US$400 million from an initial public offering in Hong Kong, according to a person familiar with the deal.
The company, founded and controlled by billionaire Li Hua, is the largest provider of services to high-end commercial properties in the Greater Bay Area in terms of revenue, it claimed in a preliminary listing document filed to the Hong Kong stock exchange earlier in May.
Li is also the controlling shareholder and chairman of Shenzhen-based developer Excellence Group.
“Under the current market environment, investors particularly prefer sectors that have more transparency, strong cash flow and show fast growth. Property management service providers are definitely seen as countercyclical, and defensive against an economic downturn,” said the person.
Joint sponsors for the Excellence deal are CMB International Capital and Haitong International Capital, both of which were not immediately available for comment.
As of the end of 2019, the group had 308 projects across 27 cities under management with an aggregate gross floor area of 23.5 million square meters, according to its preliminary listing document.
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The company provides management services primarily to office buildings, commercial complexes and industrial properties in first-tier cities. The person said many of its office buildings are leased to technology companies that have offices in Shenzhen and the wider bay area.
Its net profit for the whole of 2019 increased by about half to 233.57 million yuan (US$33.67 million). Revenue rose 50 per cent to 1.84 billion yuan from 1.22 billion yuan, according to the preliminary document.
Excellence Commercial plans to use proceeds from the IPO on business expansion and strategic acquisition, investing in information technology and other general corporate purposes.
The total gross floor area of high-end commercial space run by property management service providers in the bay area is forecast to grow to 46.1 million square metres by 2024, from 35.2 million square metres last year. That would translate to a rise in total revenue to 17.4 billion yuan from 12.6 billion yuan in 2019, research by consultant Frost & Sullivan shows.
With a total population of 70 million people, the Greater Bay Area is Beijing’s plan to turn nine Pearl River Delta cities along with Hong Kong and Macau into a regional economic and business hub that can compete with Tokyo’s or San Francisco’s bay areas.
