HONG KONG - Billionaire Li Ka-shing's property trust may raise as much as 11.2 billion yuan ($1.7 billion) in the first Chinese currency-denominated initial public offering outside the mainland.
Hui Xian Real Estate Investment Trust (REIT) is offering 2 billion units in a price range of 5.24 yuan to 5.58 yuan in Hong Kong, according to a statement released on Sunday. The forecast yield to investors is 4 percent to 4.26 percent annualized for the period from April 29 to June 30. The REIT may begin trading on April 29.
"A Li Ka-shing company will surely give confidence to investors as this is likely to be a dominant player in the market," said Tony Tong, head of market strategy at China Everbright Securities (HK) Ltd.
The sale may pave the way for other developers to follow with similar offerings as Hong Kong Exchanges & Clearing Ltd seeks to widen its product range to compete in the region. Hui Xian offers investors in Hong Kong a way to bet on appreciation of the Chinese currency while getting higher yields than on the city's yuan-denominated deposits, which reached a record $52 billion in February.
"We're confident that we can successfully complete the listing of the first yuan IPO," Edmond Ip, Hui Xian Asset Management Ltd's non-executive director, said on Sunday at a news briefing.
Companies from Baar, Switzerland-based Glencore International AG to Prada SpA of Milan plan share sales in Hong Kong this quarter, providing impetus to the exchange's push to become a global IPO hub. The sales may push the value of offers to more than $20 billion, which will be a record for a second quarter, data compiled by Bloomberg show.
The IPO is backed by Oriental Plaza properties in Beijing, according to Sunday's statement. Oriental Plaza, covering 100,000 square meters, is situated along Beijing's Chang'an Avenue. It consists of eight premium office towers, a shopping mall, a Grand Hyatt Hotel and serviced apartments, according to Oriental Plaza's website.
Cheung Kong (Holdings) Ltd, the Hong Kong developer controlled by Li, owns 33.4 percent of Oriental Plaza, while affiliate Hutchison Whampoa Ltd holds 18 percent, according to the companies' 2009 annual report.
Li, 82, is Hong Kong's richest man and the 11th-wealthiest in the world, with a fortune of $26 billion, according to Forbes magazine last month. He opened a plastic-flower factory after World War II, and began investing in Hong Kong real estate in 1967.
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