What’s new: China Vanke, one of the country’s largest developers, is seeking to raise as much as 15 billion yuan ($2.2 billion) in the biggest equity fundraising plan unveiled in the industry.
Shenzhen-based Vanke said it plans to sell as many as 1.1 billion shares, about 9.46% of its current total share capital, to no more than 35 specific investors in the Shenzhen stock market. Funds raised will be used to help weather the market downturn by replenishing liquidity and funding real estate projects.
It is unclear whether Vanke’s largest shareholder, Shenzhen Metro Group, will take part in the placement. As of the end of September, Shenzhen Metro held 27.88% of the developer.
The proposal is subject to clearance by shareholders and China’s securities regulator.
The context: Vanke’s share placement plan is the largest proposed by a developer since Chinese regulators lifted restrictions in November on equity financing for property companies to ease their liquidity crunch.
Like many of its rivals, Vanke has been hit hard by a slump in housing sales and a regulatory crackdown on developers’ borrowing. The company’s 2022 contracted sales value plunged 33.5% from a year ago, company data showed.
By the end of June, Vanke’s net debts-to-assets ratio was 35.5%, lower than that of most rivals. But the company faces mounting debt repayment pressure this year as about 40 billion yuan of bonds will approach maturity.
In addition to equity financing, Vanke is also seeking new bond issuance and has reached agreements with banks for more than 300 billion yuan of new credit lines to improve its funding access.
Contact reporter Han Wei (weihan@caixin.com) and editor Bob Simison (bob.simison@caixin.com)
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