Chinese property consultant prices US IPO near bottom; gains 18% on debut

China Real Estate Information Corp raises $216 million from its US IPO, while Genting Singapore says its $1.2 billion rights issue was 135% covered.

China Real Estate Information Corp (CRIC) raised $216 million from its US initial public offering after fixing the price towards the low end of the indicated range. Investors welcomed the move and pushed the stock 18.3% higher in its New York trading debut on Friday. This is in contrast with the fortunes of Shanda Games, which last month completed a $1 billion IPO -- the largest ever US listing by a Chinese company -- only to drop by 14% on its first day of trading.

Also at the end of last week, Genting Singapore announced that its $1.2 billion right issue had been significantly oversubscribed.

CRIC has two main business lines: the sale of information to property developers and others derived from its database of property developments and land plots across China; and the provision of customised consulting services.

The company sold 18 million primary American depositary shares (ADS), each equivalent to one ordinary share. The offering represents 13% of the enlarged share capital of the company. The ADS priced at $12 each, at the lower end of a price range that started at $11.80 and went up to $13.80. If a 15% greenshoe is fully exercised, the final deal size could increase to as much as $248 million.

One source close to the deal said the book was around four times covered. Alongside the usual mix of long-only and hedge fund accounts, the order book included a number of private equity investors, who were said to be especially interested in the dual exposure to two attractive sectors in China -- real estate and the internet. Around half of the demand originated from the US, and Asian investors accounted for another third.

CRIC is a subsidiary of another Chinese real estate company that is listed in the US, E-House (China) Holdings. After the IPO, Chinese online portal company Sina Corporation will become a major shareholder too, as CRIC is about to buy Sina's online real estate business in a transaction that will be settled through the issuance of new CRIC shares to Sina. Following these two transactions, E-House will hold 51% of the company, while Sina will have a 34% stake.

The IPO price values CRIC at a price-to-earnings ratio of approximately 22 times its 2010 projected earnings, which puts it somewhere in between E-House and Sina -- the two companies that investors were comparing it to. E-House is currently trading at around 18 times its 2010 predicted earnings, which Sina is quoted at around 25 times.

The IPO was arranged by Credit Suisse and UBS.

Also at the end of last week, resorts and casinos operator Genting Singapore released the results of its $1.2 billion rights offering, which was first announced in August. The company said that it received valid and excess applications equivalent to 135.1% of the rights shares on offer.

The company sold 1.9 billion rights shares at a ratio of one rights share for every five existing shares. Its parent company, Malaysia-based investment holding and management company Genting Berhad, subscribed in full to its entitlement of 1.04 billion rights shares, which is equivalent to 54.32% of the total number offered.

Of the capital raised, Genting Singapore will use 60% to fund future investments and the remaining 40% as working capital. When the rights issue was launched, there was some speculation that the money could be directed towards the company's major Singapore project, Resorts World Sentosa, which has exceeded its earlier budget.

The rights issue is the third largest to be completed in Singapore this year. The two biggest ones are DBS Group Holdings' $2.75 billion deal back in January and CapitaLand's $1.2 billion offering in March. Genting Singapore's rights offering was led by CIMB Group and DBS.

¬ Haymarket Media Limited. All rights reserved.
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