Vanke’s RM4b sale may spur wave of share offerings

SHANGHAI • China Vanke Co sold HK$7.8 billion (RM3.9 billion) of shares to pay down overseas debt, highlighting the potential for a wave of equity raising by Chinese developers.

The sale at HK$29.68 per share represented a 5% discount to Wednesday’s closing price, the company said yesterday. The stock surged as much as 7.5% in Hong Kong.

Guangzhou R&F Properties Co and Beijing Capital Land Ltd may be among the next to sell shares after advancing plans in recent months, according to Bloomberg Intelligence (BI) analyst Kristy Hung. For Vanke, China’s biggest listed property developer, the move highlights the strength of its balance sheet and boosts the liquidity of its H-shares, a goal the company flagged last year.

“This is potentially another avenue for Chinese developers to shore up their balance sheets, as looming debt maturity and slowing home sales weigh on their liquidity,” Hung said. It may be “a relief for developers with high leverage like R&F”.

Vanke has a stronger balance sheet and lower leverage than peers such as China Evergrande Group. The share sale will cut Vanke’s net debt to equity by four percentage points to 27%, the lowest among China developers tracked by BI. The average stands at 80%.

Debt costs have come down for Chinese builders in the dollar bond market this year, though they’re still much higher than the all-time lows reached in 2017, according to an ICE BofAML index. — Bloomberg