China Vanke Co. (000002), the country’s biggest publicly traded property developer by market value, plans to move trading of its foreign-currency denominated shares to Hong Kong to reach more investors.
Vanke will seek to convert its Shenzhen-listed B shares to Hong Kong-listed H shares, pending approvals from the shareholders and the regulators, the company said in a filing to the Shenzhen stock exchange yesterday. Trading in Vanke’s so- called B shares, denominated in Hong Kong dollars, and in its yuan-denominated A shares has been halted since Dec. 26 pending yesterday’s announcement, and will resume on Jan. 21.
Vanke joins China International Marine Containers Group Co. (2039), the first company to leave the foreign-denominated B share market for Hong Kong, where daily trading volume is more than 3,000 times higher, data compiled by Bloomberg show. The conversion gives Shenzhen-based Vanke continued direct access to global investors, whose access to domestic A-shares on Chinese bourses is limited.
A group of so-called third parties will provide a cash option for B-share holders who decide not to swap their stock for H-shares, according to the statement. China Resources (Holdings) Co., Government of Singapore Investment Corp. and Hillhouse Capital Management Ltd. are among buyers who have agreed to pay HK$13.13 a share to exiting investors.
B-share markets, where foreign institutions and Chinese individuals are allowed to trade, were set up in 1992 to give local companies a way to raise funds from global investors, banned from buying securities denominated in yuan. Interest in B shares has waned as the government allowed qualified overseas investors to access the larger, more liquid A-share market and eased limits on foreign exchange.
A Hong Kong listing will give Vanke a “smoother funding channel” than Hong Kong-listed Winsor Properties Holdings Ltd., in which Vanke bought a 79 percent stake in July, Tian Shixin, a Shanghai-based analyst at BOC International China Ltd., said in a Dec. 26 interview.
The China Securities Regulatory Commission is considering looser criteria for mainland companies to sell shares in Hong Kong as part of its efforts to increase their access to capital, the Shanghai Securities News reported Dec. 28, citing an unidentified CSRC official.
The company has 1.31 billion B-shares, about 12 percent of the total capital, with a market capitalization of HK$16.4 billion ($2.1 billion) before the Dec. 26 suspension. It was the second largest listed company among both Shanghai and Shenzhen B shares in terms of market capitalization.
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