The deal was brought by JPMorgan and Morgan Stanley, which had a busy night with two placements each.
The 42.3 million shares were priced in the lower half of the indicative range at HK$38.20 for a 4.95% discount to ThursdayÆs close of HK$40.20. They had been offered too investors at HK$37.95 to HK$38.75 apiece, which marked a discount of 3.6% to 5.6%.
The discount looks quite fair, given the size of the deal, which accounted for 20% of the H share capital and 5.5% of the total company and represented about 29 days trading volumes, based on the past monthÆs trading data. The company also had to fight for investorsÆ attention with two other Mainland property developers in the market at the moment trying to raise funds through initial public offerings.
An existing shareholder of a third China-based property play, Hopson Devlopment Holdings, was also in the market with a Credit Suisse-led placement yesterday. While much smaller in size at only HK$812.5 million ($105 million), that offer of secondary shares was priced at a 10.6% discount to the HK$18.18 close, making R&FÆs tighter pricing stand out, according to a market source.
The order book was said to have been more than two times covered with 100 plus investors submitting orders. The interest came from a mixture of institutions, real estate funds and hedge funds.
The placement has been anticipated for quite some time and it should be good for the stock to get it out of the way. The Hang Seng Index hit a fresh six-week high yesterday, but R&F has been stuck in a trading range between HK$39 to HK$42 for the past six weeks after recovering from a low of HK$30.55 in June. It hit an all time high of HK$50.20 on May 9 before concerns about what impact the governmentÆs austerity measures started to push it lower.
The has surged 234% since its IPO in July last year.
Last month, R&F reported a 60% decline in interim profits after income from completed projects fell by about Rmb259 million. However, earnings at developers tend to be lumpy and the companyÆs aggressive acquisitions is giving investors optimism about sustainable growth going forward.
According to the earnings release, the company boosted its land bank to 9.34 million square metres in the first half through the acquisition of 10 sites in Guangzhou, Tianjin, Beijing and Chongqing for about Rmb4.4 billion. Earlier this month it also won the tenders for two commercial sites in GuangzhouÆs new business district, paying a combined Rmb450 million.
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