HKC Holdings raises $162 million from placement

The top-up placement comes a few weeks after the property company issued shares to Cerberus and Penta.
HKC Holdings, a Hong Kong-based property company, sold HK$1.26 billion ($162 million) of shares in a top-up placement on Tuesday.

The company sold 450 million new shares at HK$2.80 per share, equivalent to approximately a 10.54% discount to the closing price of HK$3.13 per share on July 31, and approximately an 18.41% discount to the average closing price of about HK$3.43 per share for the last five trading days.

ôPeople knew the trade was coming, because they knew HKC had to sell shares, but they just didnÆt know when,ö says a person close to the deal.

The reason investors knew the top-up placement was coming was earlier this month, on July 16, HKC issued shares to private investment fund Cerberus, as well as asset management firm Penta, for HK$2.27 per share, raising HK$5.5 billion. But that left the free float at about 20%, and by Hong Kong law, 25% of a company needs to be in public hands. So HKC needed to increase its float. The sale to Cerberus and Penta is subject to shareholder approval at a special general meeting on August 17.

DBS Asia Capital and Goldbond Capital holdings handled the sale, which attracted mainly institutional investors with a long view. Some hedge funds took part, but people close to the deal note that they were ôvalue driven rather than momentum focusedö. About 70% of the investors came from Asia, with the rest from Europe.

Given the market conditions, sources say that the HK$2.80 price was satisfactory. The book was covered in one-and-a-half hours, but it was purposefully kept open for several more hours for the European market.

The company says that 80% of the net proceeds will be used for property development projects, while the remainder will be split equally for alternative energy projects and working capital. HKC, which has projects in Shanghai and Nanxun in Zhejiang, has said it intends to add another three mainland projects to its portfolio.
¬ Haymarket Media Limited. All rights reserved.
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