Vanke jumps on spin-off bandwagon

Finance | Bloomberg and Avery Chen 29 Apr 2021

China Vanke (2202), the country's largest developer by market value, is working with an adviser to prepare for a listing of its property management business in Hong Kong that could raise about US$2 billion (HK$15.6 billion), people with knowledge of the matter said.

The Shenzhen-based company is holding talks with several other banks for the offering, which could take place as soon as the end of this year, the people said. The use of technology in its real estate management could help boost the unit's valuation, the people said.

But Vanke's spokesman denied the IPO plan.

Vanke would join other Chinese developers such as China Resources Land (1109) and Country Garden (2007) in spinning off their management units, which are less vulnerable to government policy changes and economic cycles.

Bloomberg News in 2019 reported Vanke's plans, which was later delayed by the Covid-19 pandemic.

Shares in China Resources Mixc Lifestyle Services (1209), which raised US$1.8 billion in its Hong Kong IPO, have more than doubled since its December debut. Country Garden Services (6098) has risen over 700 percent since its listing in 2018.

Property management and related services were China Vanke's second-largest revenue generator after property sales. The business contributed 15.4 billion yuan (HK$18.43 billion), equivalent to about 3.7 percent of the developer's total revenue in 2020.

Meanwhile, Zhaoke Ophthalmology (6622), a spinoff of Lee's Pharmaceutical (0950), dropped more than 5 percent in gray markets ahead of market debut.

The Guangzhou-based firm raised HK$297.4 million after pricing the IPO at HK$16.80 apiece, the top end of the indicative price range.

The retail portion was oversubscribed by 55 times while the institutional tranche was cover by 5.3 times.

In other news, Readboy Education, which sells electronic learning machines in mainland China, has applied for Hong Kong IPO recently.

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