Li Ka-Shing’s Lure May Mean $1.7 Billion Yuan Property Trust IPO
April 10, 2011, 12:03 PM EDTBy Stephanie Tong
April 11 (Bloomberg) -- Billionaire Li Ka-shing’s property trust may raise as much as 11.2 billion yuan ($1.7 billion) in the first Chinese currency-denominated initial public offering outside the mainland.
Hui Xian Real Estate Investment Trust is offering 2 billion units in a price range of 5.24 yuan to 5.58 yuan in Hong Kong, according to a statement released yesterday. The forecast yield to investors is 4 percent to 4.26 percent annualized for the period from April 29 to June 30. The REIT is expected to begin trading April 29.
“A Li Ka-shing company will surely give confidence to investors as this is likely to be a dominant player in the market,” said Tony Tong, head of market strategy at China Everbright Securities (HK) Ltd.
The sale may pave the way for other developers to follow with similar offerings as Hong Kong Exchanges & Clearing Ltd. seeks to widen its product range to compete in the region. Hui Xian offers investors in Hong Kong a way to bet on appreciation of the Chinese currency while getting higher yields than on the city’s yuan-denominated deposits, which reached a record $52 billion in February.
“We’re confident that we can successfully complete the listing of the first yuan IPO,” Edmond Ip, Hui Xian Asset Management Ltd.’s non-executive director, said yesterday at a press briefing.
Glencore to Prada
Companies from Baar, Switzerland-based Glencore International AG to Prada SpA of Milan plan share sales in Hong Kong this quarter, providing impetus to the exchange’s push to become a global IPO hub. The sales may push the value of offers to more than $20 billion, which would be a record for a second quarter, data compiled by Bloomberg show.
The IPO is backed by Oriental Plaza properties in central Beijing, according to yesterday’s statement. Oriental Plaza, covering 100,000 square meters (1.1 million square feet), is situated along Beijing’s Changan Avenue. It consists of eight premium office towers, a shopping mall, a Grand Hyatt Hotel and serviced apartments, according to Oriental Plaza’s website.
Cheung Kong (Holdings) Ltd., the Hong Kong developer controlled by Li, owns 33.4 percent of Oriental Plaza, while affiliate Hutchison Whampoa Ltd. holds 18 percent, according to the companies’ 2009 annual report.
Li, 82, is Hong Kong’s richest man and the 11th-wealthiest in the world, with a fortune of $26 billion, according to Forbes magazine last month. He opened a plastic-flower factory after World War II, began investing in Hong Kong real estate in 1967 after riots tied to China’s Cultural Revolution depressed prices and built Cheung Kong into a company with a market value of $38.8 billion as of April 8.
“Aggressively-priced”
His empire now spans ports, real estate, hotels, retailing, infrastructure, energy and telecommunications. His high-speed mobile-phone business posted its first profit in 2010 after seven years of losses, Li said on March 30.
Initial share sales linked to Li, who is nicknamed “Superman” by the Hong Kong media for his investing prowess, have proved popular with investors. “However, these companies are usually quite aggressively-priced, which could be a minus point," Everbright’s Tong said.
Li’s Internet unit, Tom.com Ltd., held an IPO in 2000 that was 670 times oversubscribed. The stock rose more than fivefold on its March 1 debut, nine days before the Nasdaq Composite index peaked, marking the end of the dotcom bubble. The company, renamed Tom Group Ltd., is currently valued at HK$3.5 billion ($450 million), 31 percent less than at the IPO.
CK Life Sciences
In 2002, an initial share sale for Li’s CK Life Sciences International (Holdings) Inc, a biotechnology company, was 121 times oversubscribed. The stock, priced at HK$2, traded at 54 Hong Kong cents on April 8.
‘‘The success of a REIT is largely dependent on the performance of its asset management,” Hui Xian Asset Chairman Kam Hing-lam said yesterday, adding that the trust’s assets will be managed by Cheung Kong, ARA Asset Management Ltd. and Citic Securities International Co. “This is an appropriate and ideal combination.”
BOC International Holdings Ltd., Citic Securities and HSBC Holdings Plc are managing the sale, which begins today and runs until April 19.
--With assistance by Fox Hu and Kelvin Wong in Hong Kong. Editors: Jim McDonald, Paul Gordon
To contact the reporters on this story: Stephanie Tong in Hong Kong at stong17@bloomberg.net
To contact the editor responsible for this story: Andreea Papuc in Hong Kong at apapuc1@bloomberg.net
