SOHO China Ltd, the largest developer in central Beijing, rose yesterday after starting trade in Hong Kong on its initial public offering.
The company's stock rose 17 percent to HK$9.74 at the noon break in Hong Kong after climbing as much as 23 percent earlier. Soho China raised HK$12.9 billion (US$1.7 billion) in its initial share sale. Individual investors ordered HK$220 billion worth, or 169 times the shares set aside for them, the company said.
"I won't expect them to gain too much from the IPO price," said Francis Lun, general manager at Hong Kong-based Fulbright Securities Ltd. "Compared with competitors, their land bank isn't as attractive. The oversubscription probably reflected the amount of excessive liquidity in the market more than anything."
Sino-Ocean Land, the city's largest builder by area sold, surged 43 percent on its September 28 Hong Kong trading debut, according to Bloomberg News. Share sales provide an alternate source of funding after China raised interest rates to a nine-year high on September 14, seeking to damp speculation in property and equities. Soho is one of two Beijing builders debuting in Hong Kong this month, the other being China Aoyuan Property Group Ltd.
Land prices in 70 Chinese cities surged 13.5 percent in the second quarter, according to the National Development and Reform Commission. Property price increases reached a two-year high of 8.2 percent in August, the state planner said.
Soho China and stockholders have sold a combined 1.55 billion shares, a 31-percent stake, at HK$8.30 each. The price, set at the top end of the range, helped rank the share sale as the third-largest Hong Kong property IPO since the beginning of 1999, when Bloomberg began to track such data.
The developer in 2003 called off its first attempt to go public, when it sought to raise US$250 million in the United States. That offer faltered when banks helping sell the stock disagreed on the profit outlook, bankers involved said at the time.
Soho China, founded by Pan Shiyi and his wife, former Goldman Sachs analyst Marita Zhang Xin, has built 1.2 million square meters of properties, according to a sale document distributed to investors before the share sale.
It's raising capital to finance construction, acquisitions and repay debt. It has built or is building six Soho-branded developments in the Beijing and also built the Commune by the Great Wall boutique hotel.