[photopress:property_evergrande.jpg,full,alignright]Evergrande Real Estate Group, Donald Trump’s potential partner in a Shanghai office project, and its owners said that it plans to raise $2.1 billion in the world’s largest IPO by a real estate company since June.
Evergrande plans to sell 2.85 billion new shares for $0.45 to $0.7 each. Existing owners will be offered 110.9 million more shares at the same price.
The Guangzhou-based company may become the first Chinese developer to complete a Hong Kong initial public offering this year, amid the slowest start to the city’s IPO market in eight years measured by the number of sales.
Evergrande focuses on smaller projects, which enables it to shorten development periods to three to five years, compared to five years for other homebuilders. It anticipates a sevenfold increase in earnings this year on strong property revenue
A wide price range for the proposed $2.1 billion IPO suggests the issuer wants as much flexibility as possible should the markets turn during the roadshow.
Evergrande, which focuses primarily on second tier cities, is expected to deliver strong earnings growth over the next few years after an aggressive accumulation of land in the past 18 months, but based on the pricing terms it appears the company realises that this may not be enough in the current market environment.
Acknowledging the fact that Chinese property stocks aren’t exactly the most favoured sector at the moment one source said during the pre-marketing, ‘It will have to come cheap.’