Firms ride stock rally to tap market for HK$12b

Kerry Properties and Beijing Enterprises among issuers

A rush to tap the record-high stock market saw investors and firms including Kerry Properties and Beijing Enterprises Holdings yesterday seeking to raise more than HK$12 billion from share sales.

However, some analysts say the sales by some of the city's biggest corporate names are a sign the market has peaked, with fears the global credit crunch will hit equities later this year.

'They are trying to capitalise on the recent market rally before any correction,' said Patrick Yiu, an associate director at CASH Asset Management. 'Most of them have hit new highs since the bull run in 1997.'

Mr Yiu said unless some heavyweights such as HSBC Holdings or China Mobile tapped the market for financing, many investors might consider shares had peaked.

Kerry Properties, part of the Kerry Group, raised HK$4.15 billion by selling 70 million new shares at HK$59.24 each, sources said.

That was a discount of 4.99 per cent to Wednesday's closing price of HK$62.35. Kerry Group controls the SCMP Group, publisher of the South China Morning Post.

The firm marketed the shares at a price between HK$58.05 and HK$59.86 each yesterday morning, according to a sale document sent to fund managers. The proceeds will mainly be used to expand the company's mainland property business. Citi was the arranger of the deal.

Kerry Properties shares have surged 71.53 per cent this year.

'The response was hot as the offering was upsized from an initial 60 million shares,' said a source. 'Most buyers are long-term investors and mutual funds.'

Kerry was the largest among three offerings launched yesterday.

Beijing Enterprises was trying to raise HK$3.81 billion in a new share placement while an investor sold down HK$2.4 billion worth of stock in Gome Electrical Appliances Holding.

Beijing Enterprises, controlled by the capital city's government, was selling 100 million new shares at HK$36.55 to HK$38.10 each, according to a sales document sent by one of the arrangers.

The new capital will be spent on projects for gas distribution, toll roads and water projects.

Goldman Sachs, Lehman Brothers and Macquarie helped the sale.

The Hang Seng Index yesterday rose 146.49 points or 0.57 per cent to a new high of 25,701.13, after gaining 977.79 points on Wednesday.

'I have heard many names surrounding share placements over the past two days as investment banks are heavily lobbying corporates for new financing amid a flood of liquidity,' said one hedge-fund manager.

An investor in Gome, the mainland's largest consumer electronics retailer, was seeking to raise HK$2.4 billion by offloading a 5 per cent stake in the firm. The unknown vendor hired China International Capital Corp to offer 170 million shares at HK$13.74 to HK$14.04 per share, market sources said.

Three medium-sized listed firms also raised as much as HK$2.25 billion from share placements.