Evergrande Property Services Group’s Hong Kong IPO priced at the lower end of expectations raises $1.8 billion the tepid demand underscoring concerns about the financial health of its debt-laden parent.
Evergrande Property Services Group’s Hong Kong IPO priced at the lower end of expectations raises $1.8 billion the tepid demand underscoring concerns about the financial health of its debt-laden parent.\
These include a secondary share sale last month that raised only half its initial target and the dropping of a plan to inject most of its property assets into a Shenzhen company via a backdoor listing.
“Evergrande has too much debt…the listing of the property services unit is to save the parent; Evergrande will continue to sell shares (in the unit) after the listing to cut debt,” said Francis Lun, chief executive of GEO Securities.
Hong Kong’s second-biggest IPO this year priced at HK$8.80 per share, compared to the marketed range of HK$8.5 to $9.75 each, three sources with direct knowledge of the matter said, declining to be identified as the information has not yet been made public.
The IPO price does, however, represent a 5% increase from a $3 billion private funding round the company undertook in August when it issued shares at HK$8.375.
At HK$8.80 a share, Evergrande Property is valued at HK$95.06 billion ($12.3 billion). Half the funds raised will go to the company with the other half earmarked for the parent firm.
A greenshoe option also exists, which if exercised would take the size of the stake sold from 15% to 17%.\
Evergrande has been scrambling for cash as Beijing tackles what it considers excessive borrowing in the real estate development sector with planned new debt-ratio caps.