[photopress:property_beijing_business_district.jpg,full,alignright]Soho China, the largest developer in Beijing’s central business district, plans to raise as much as $1.65 billion in a revived initial share sale.
The company and stockholders will sell a combined 1.55 billion shares, equivalent to a 31% stake, although no formal announcement has yet been made. The report is that almost 81% being offered are new.
Soho is one of three Chinese property developers planning to raise more than $3 billion through initial public offerings this month. Beijing-based Soho’s IPO comes after China raised interest rates for the fifth time since March, pushing up borrowing costs for developers and property investors. The increase took the one-year lending rate to a nine-year high.
Sam Zhang, Beijing-based chief representative for LIM Advisors Ltd., which manages about $2 billion, said, ‘The Chinese government has tightened bank loans to property developers, prompting them to tap alternative financing channels.’
He said that larger developers such as Soho and Sino-Ocean Land Holdings remain attractive investments as increasing urbanization drives up demand for property.
Sino-Ocean is seeking to raise as much as $1.5 billion in a Hong Kong IPO. Real estate-related IPOs may fetch almost $7 billion this year, close to the $8.4 billion total amassed between 1999 and 2006.
According to the National Development and Reform Commission land prices in 70 major Chinese cities surged 13.5% in the second quarter from a year earlier and the rate of property price increase hit a two-year-high of 8.2%.