One of China’s biggest property developers has abruptly abandoned a share placement, sending its stock down as much as 10% on Tuesday and renewing concerns about the troubled real estate sector, reports the Financial Times. Country Garden, one of the country’s largest developers and a barometer of the sector’s health, decided to cancel a $300 million share placement on Monday night, two people briefed on the situation said. A successful placement would have been a rare new capital markets deal in a sector starved of investment. JPMorgan was the sole bookrunner.
“Due to inconsistency in communications with various parties, the company hasn’t managed to sign off the final agreement on a proposed [share placement] plan,” Country Garden said in a statement sent to the Financial Times on Tuesday. “The company is also not considering the deal at the current stage.”
The cancellation is a blow for an industry whose poor performance remains one of Chinese policymakers’ biggest challenges almost two years after developer Evergrande defaulted and sparked a cash crunch. Country Garden is one of the few prominent private developers to avoid default, posting a RMB 2 billion ($280 million) profit in the first half of last year.