China Vanke spin-off seeks $780mn in Hong Kong’s biggest IPO this year

China Vanke strategies to elevate up to $784mn in Hong Kong from the spin-off of its residence administration unit, which is established to exam world-wide investor appetite for real estate-similar listings following a string of substantial-profile defaults in the sector this yr.

Onewo, a subsidiary of Vanke, claimed it would elevate up to HK$6.2bn ($784mn) from an original general public providing of about 117mn shares priced at a array of HK$47.10 to HK$52.70 each, according to a filing with the Hong Kong exchange.

The determination to checklist Onewo will come as Chinese authorities action up actions to aid the country’s beleaguered home sector, which accounts for about a third of complete economic output, as growth in the world’s 2nd-major overall economy slows.

Demand for housing in China has crumbled after a series of defaults by builders stoked a crisis of confidence between homebuyers. Final 7 days, point out banking companies slash deposit costs for the first time because 2015 in a bid to raise flagging growth.

The share give marks the premier IPO from a company in Hong Kong this 12 months, with only a handful of listings possessing brought in extra than $1bn. Secondary listings by Tianqi Lithium and China Tourism Responsibility Cost-free — both of which had been now outlined on mainland exchanges — lifted $1.7bn and $2.1bn, respectively.

Onewo managed about 785mn sq m of residential and business place as of the conclusion of 2021, and brought in once-a-year profits of Rmb1.7bn ($243mn), up about 13 for each cent yr on calendar year. Vanke owns about 63 for each cent of the company and accounted for about 16 for each cent of revenues at Onewo very last calendar year.

Brokers reported that Vanke was also below strain to go in advance with the share sale or it would be forced to update Onewo’s prospectus considering that its application to the Hong Kong trade was approaching the six-thirty day period limit.

“They can not modify the listing timing, in any other case they’ll have to use a new set of accounting details, which would acquire time and funds,” explained Louis Tse, running director of Wealthy Securities in Hong Kong.

“They want to realise whatsoever funds they can nevertheless get from the industry,” Tse mentioned. “If there is a sponsor eager to do the offer additionally a bunch of underwriters, they could possibly as effectively go now.”

Onewo has significant guidance from 6 cornerstone traders, amongst them China’s govt-controlled Blended Ownership Reform Fund, which collectively have subscribed for up to $280mn worth of shares.

The move to go after the listing arrived as economists at UBS downgraded the advancement forecast for China’s financial growth on Monday, citing a “lacklustre third-quarter restoration and ongoing property downturn”.

Onewo expects to cost its shares on Thursday and list them on September 29. Citic Securities, Citigroup and Goldman Sachs are joint sponsors for the IPO.