CITIC Group considers spinning off real estate business

CITIC Group, the state-owned financial conglomerate, is planning to spin off its real estate unit in an initial public offering in order to raise funds for expansion, state media reported. Speaking at the National People’s Congress, Kong Dan, CITIC chairman, said the real estate share of the group’s business – which stood at 5% of total net profit in 2009 – will rise in the medium term. This growth will be funded by a CITIC Real Estate IPO. Kong said the timing of the offering would largely depend on market conditions, but he didn’t say where it would take place or how much would be raised. CITIC Group posted a gross profit of US$5.13 billion in 2009, up 35.4% year-on-year. It plans to step up overseas expansion through its Hong Kong units, including CITIC Pacific (0267.HK), in which holds a 58% stake, and CITIC Ka Wah Bank, a fully owned subsidiary of CITIC International Holdings, in which CITIC Group has a 70% stake.