Hot Chinese property from Goldman

A Chinese property developer hopes to be the first private sector listing from the mainland on the NYSE.

Goldman Sachs has been mandated to list the first private sector company from China on the New York Stock Exchange. The company in question is called Soho, and is part of a property company called Beijing Redstone Industries.

Depending on market conditions the deal - which will be dual-listed in New York and Hong Kong - is slated to raise $300 million. It is projected to roadshow and list in June. One challenge for the lead manager and investors will be to figure out how to benchmark and value the company, which is fairly unique.

Soho has five residential properties in Beijing, the first of which sold out in three months. The average price of apartments sold in its original Soho New Town complex was Rmb2-3.5 million. Three other projects are at different stages of construction and one is still at the planning and approvals stage. The price of the apartments so far sold should tell you what the company's target market is - China's newly affluent aged between 30 and 45 years old.

Redstone has built up a brand among these people as a 'lifestyle provider', thanks to its creative designs. Indeed, for those who have ever seen 'Wallpaper' magazine, Beijing Redstone epitomises its Chinese offshoot. The story investors will be sold is that here is a company which makes an ideal proxy for China's urbanization and growth in home ownership.

And thanks to the fact that all apartments are pre-sold before the buildings are completed, this is a property vehicle that cannot be valued based on NAV, but on cashflow and the cache of its brand in Beijing. It carries no inventory and prefers to be viewed like a branded manufacturer - in this case of apartments.

The company was set up by a former Goldman investment analyst, Zhang Xin and her 38 year old husband, Pan Shiyi, a former oil ministry official, whom she met while on a marketing trip to China for Goldman. He made a fortune in a building boom in Hainan, and has his own website

The properties erected by the pair have been praised for their minimalist interiors and striking designs - with one being nominated for a top international architecture prize in Venice. The company is unable to comment due to SEC restrictions, but it is thought the $300 million will be used to finance future growth.

The decision to list in New York - which denotes a higher fee than doing a simple Hong Kong listing - is reckoned to fit in with the company's goal to become an international company. It also fits with its founders' ambition to be the first private sector company from China to list in the US.

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