Chinese developer decides on IPO despite headwinds

04/07/2015 03:44 AST

Chinese developer Dalian Wanda plans to raise up to 12 billion renminbi (Dh7.1 billion, $1.9 billion) through a share offering in China, even as mainland stocks extend their precipitous three-week slide.

Friday’s announcement comes roughly six months after the company’s Hong Kong initial public offering. The proceeds of a second listing - of up to 300 million shares - would help fund five projects Wanda has under way on the mainland, where its mixed-use Wanda Plaza developments are familiar sights in cities.

Sites in Nanjing and Chengdu are among those that would be financed from the mainland A-share listing, the group said. Dalian Wanda, China’s largest commercial property developer, has given itself a year to float in either Shenzhen or Shanghai - both of which sit well below their peaks of less than a month ago.

By mid-day on Friday, Shanghai stocks were up just 17 per cent for the year, having been up 60 per cent in early June. Shenzhen, home to fast-growing start-ups and tech stocks, was 52 per cent higher, down from a 122 per cent gain just three weeks ago.

In spite of the falls, A-shares still offer valuations that are on average 26 per cent higher than Hong Kong stocks. Since its float last December, Wanda’s Hong Kong shares have risen 18 per cent, outperforming the 8 per cent gain by the Hang Seng China Enterprises Index.



Crowdfunding

This week the company said its mainland parent, controlled by the group’s founder Wang Jianlin, had pledged 1.8 per cent of its share capital for loans for its own use. Also this week, Dalian Wanda was part of a group that injected $500 million into Kingston Financial, a local Hong Kong brokerage.

Last month, the developer raised $800 million via crowdfunding, with a product that guaranteed a 12 per cent return generated by rentals in completed Wanda Plaza developments.

Wang is one of China’s richest men and has embarked on a string of acquisitions and part-stakes outside his core property operations. Deals this year include a 20 per cent stake in Atletico Madrid football club and the sports rights agency run by the nephew of Sepp Blatter, former Fifa president.

Previous acquisitions include the US AMC cinema chain, and the company has expressed interest in buying Hollywood film producer Lions Gate Entertainment.

The public float of Wanda Commercial will be about 47.3 per cent following the sale, according to the company’s statement.

Financial Times