China Vanke sells HK$7.8b shares to pare debt

Business | 28 Mar 2019 3:20 pm

China Vanke Co. sold HK$7.8 billion of shares to pay down overseas debt, highlighting the potential for a wave of equity raising by Chinese developers, Bloomberg reports.

The sale at HK$29.68 per share represented a 5 percent discount to yesterday’s closing price, the company said today. The stock surged by 7.5 percent in Hong Kong. Guangzhou R&F Properties Co. and Beijing Capital Land may be among the next to sell shares after advancing plans in recent months, according to Bloomberg Intelligence analyst Kristy Hung.

For Vanke, China’s biggest listed property developer, the move highlights the strength of its balance sheet and boosts the liquidity of its H-shares, a goal the company flagged last year.

“This is potentially another avenue for Chinese developers to shore up their balance sheets, as looming debt maturity and slowing home sales weigh on their liquidity,” Hung said. It may be “a relief for developers with high leverage like R&F.” Vanke has a stronger balance sheet and lower leverage than peers such as China Evergrande Group.

The share sale will cut Vanke’s net debt to equity by 4 percentage points to 27 percent, the lowest among China developers tracked by Bloomberg Intelligence. The average stands at 80 percent.

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