Property firms seek funds from stock market
Updated: 2007-09-17 10:26
The price of ST Jintai shares set a new domestic stock market record when it increased nearly sevenfold within 42 trading days, jumping from 3.96 yuan (US$0.53) on July 9 to 26.58 yuan on August 31.
The trigger for the skyward rise was the company's announcement that it would sell 8 billion A shares to New Handsome Joint Group, Jintai's largest shareholder, to acquire New Handsome Joint's real estate business. That means Jintai will reshuffle its operations, and the chemical and pharmacy manufacturer would reinvent itself to become a real estate firm.
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"Because the regulator has very strict requirements for direct IPOs, raising money through shell companies has become another useful option," says Li Wenjie, general manager of Centaline China (North China region).
Because money is the lifeline for real estate companies, many property developers are striving to get their piece of the stronger-than-ever bull market this year through initial public offerings, listings through shell companies and placements.
While Sino-Ocean Real Estate Development Co, SOHO China and Longhu Properties recently announced plans to float shares on the Hong Kong bourse, some real estate firms listed on the bourse, such as R&F properties and Shanghai Forte, are retreating to Shanghai exchanges.
Statistics show that listed real estate companies have raised 115 billion yuan through placements and allotments this year, making them the most active players in the capital market.
"The strong driving force behind property developers' intensive capital operations is the new rounds of 'enclosure movements'," Li Wenjie says of the process in which companies enclose land for development.
Among China's real estate firms, Poly is grabbing the most land throughout the country. After acquiring lands in Shenyang, capital of Northeast China's Liaoning Province, and Central Southwest China's Chongqing for 770 million yuan in June, Poly grabbed another 11 land parcels in seven cities in July and August, for which it paid 8.29 billion yuan.
Vanke, the country's largest real estate company, is also striving to increase its land reserves. In July alone, Vanke spent 6 billion yuan to take over several pieces of land in Beijing and Dongguan.
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