Property developer China Vanke raises $500 mln, shares sink

This post was originally published on this site

https://i-invdn-com.investing.com/news/LYNXNPEC6B036_M.jpg

Investing.com–Shares of real estate giant China Vanke Co Ltd (HK:2202) sank on Thursday after the firm said it had raised nearly $500 million through the sale of new shares, with a bulk of its proceeds going into repaying its debt obligations.

China Vanke’s Shenzhen-listed shares (SZ:000002) fell 2.2% to 16.85 yuan, while the firm’s Hong Kong-listed shares fell 4% to HK$13.34. 

The firm said on Thursday that it had sold 300 million new Hong Kong shares at a placing price of HK$13.05 per share- a nearly 7% discount to its close on Wednesday. The share sale raised total gross proceeds of HK$3.90 billion ($1= HK$7.8495). 

About 60% of the net proceeds of the sale will go towards repay outstanding overseas debts of the company, while the remaining 40% will be used as working capital, China Vanke said in a statement. 

The move comes shortly after state-run property developer Poly Property Development Co Ltd (HK:6049) also flagged progress in a private share sale of as much as 12.5 billion yuan.

Vanke, which is one of the biggest property developers in the country, had raised $2.2 billion in February through an onshore share placement. 

China had last year relaxed restrictions on onshore equity issuances by real estate developers, offering a lifeline to the sector that was battered by a liquidity crisis over the past three years. 

China’s property market accounts for nearly a quarter of economic growth, with the government pushing for a pickup in the sector as it eyes an economic rebound this year. Measures appear to have borne some fruit, as Chinese house prices appeared to have stabilized in January after plummeting for eight consecutive months. 

Still, major players in the real estate market are struggling to avoid defaults, as a series of COVID lockdowns also ground construction activity to a halt last year.