Billionaire Li Ka-shing’s (李嘉誠) property trust may raise as much as 11.2 billion yuan (US$1.7 billion) and begin trading on April 29 as the first yuan-denominated initial public offering (IPO) outside mainland China.
Hui Xian Real Estate Investment Trust (匯賢房地產投資信託基金) is offering 2 billion units in a price range of 5.24 yuan to 5.58 yuan in Hong Kong, according to a statement released yesterday. The forecast yield to investors is between 4 percent to 4.26 percent per unit annualized for the period between April 29 and June 30.
“The pricing is reasonable and fair,” said Edmond Ip (葉德銓), Hui Xian Asset Management Ltd’s non-executive director. “We’re confident that we can successfully complete listing the first yuan IPO.”
The sale may pave the way for other Hong Kong developers to follow with similar offerings. Hui Xian offers investors in Hong Kong, where yuan-denominated bank deposits reached a record US$52 billion in February, a way to bet on appreciation of the Chinese currency while getting higher yields than on deposits.
The IPO is backed by Oriental Plaza properties in central Beijing. Oriental Plaza, covering 100,000m2, is situated along Beijing’s Changan Avenue. It consists of eight premium office towers, a shopping mall, a Grand Hyatt Hotel and serviced apartments, according to Oriental Plaza’s Web site.
Cheung Kong (Holdings) Ltd (長江實業), the Hong Kong developer controlled by Li, owns 33.4 percent of Oriental Plaza, while affiliate Hutchison Whampoa Ltd (和記黃埔) holds 18 percent, according to the companies’ 2009 annual report.
“The success of a [real-estate investment trust] is largely dependent on the performance of its asset management,” Hui Xian chairman Kam Hing-lam (甘慶林) said at the briefing yesterday, adding that the trust’s assets will be managed by Cheung Kong, ARA Asset Management Ltd and Citic Securities International Co (中信證券). “This is an appropriate and ideal combination.”
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