Onewo, Chinese unit of Vanke, will raise $783 million in Hong Kong’s largest IPO in 2022

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HONG KONG, Sept 19 (Reuters) – The real estate services arm of developer China Vanke Co Ltd has launched Hong Kong’s biggest initial public offering (IPO) of 2022, aiming to raise up to $783.5 million in part of a deal that will be a key test of investor appetite. .

The subsidiary, Onewo Space-Tech Service, set a price range of HK$47.1-52.7 per coin in the public offering of 116.74 million of its shares, which represent 10% stake social of the company, according to a sheet of conditions.

The price range values ​​Onewo between $7 billion and $7.8 billion.

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Vanke, which is China’s second-largest property developer by sales and is listed in both Shenzhen and Hong Kong, owns 62.9% of Onewo and is its biggest client, according to regulatory filings.

The deal is likely to reveal investors’ appetite to buy into the services and management sub-sector associated with China’s cash-strapped property market, which has swung from crisis to crisis over the past year. past year.

While a series of Chinese developers defaulted on their offshore debt during this period, Vanke weathered the crisis better than its rivals, thanks in part to lower debt-to-equity ratios and partial equity ownership. ‘State.

Once Onewo’s shares are listed on the Hong Kong stock exchange, their performance is also likely to influence the prospects of other real estate service companies seeking to raise capital through public offerings.

The Hang Seng Property Services and Management Index (.HSPSM) is down 44.3% year-to-date, reflecting continued weakness in the property sector.

Some service companies have rushed to lend money to their parent companies or raise funds for them. Investors took a dim view of these moves.

In August, shares of property manager Jinke Smart Services Group (9666.HK) fell 37% in one day after announcing it would lend up to $222.3 million to parent company Jinke Property (000656. SZ).

Onewo’s IPO would not be aimed at raising cash for Vanke, said Yu Liang, chairman of the parent company, on Aug. 31. The subsidiary accounted for only 1-2% of Vanke’s assets and profits, Yu added.

DOWNGRADED

Volatility in global financial markets led to Onewo’s IPO being scaled back from its initial ambition to raise up to $2 billion, people with knowledge of the matter previously told Reuters.

Onewo said it plans to use the IPO funds to expand its existing business, upgrade its software and take majority stakes in three to five “value-added” service providers in its industry.

The IPO deal has participation from six high-profile investors who together subscribed for up to $280 million in shares, according to filings. Among these investors are the Chinese fund Mixed Ownership Reform Fund, China Chengtong Investment and UBS Asset Management.

The final IPO price will be set on September 22; public trading in the shares is due to begin on September 29.

The deal also comes as a boost for the Hong Kong stock market.

Amid Sino-US tensions and an increasingly stringent regulatory environment in China, companies have raised just $2.42 billion in Hong Kong IPOs so far in 2022, compared to $23.76 billion for the same period of 2021, according to Refinitiv data.

Onewo’s deal will become Hong Kong’s biggest IPO in 2022, eclipsing that of Huitongda Network Co Ltd (9878.HK), which raised $297 million in February.

The two largest equity deals in Hong Kong this year – the sale of $2.1 billion shares of China Tourism Duty Free Corp and the $1.7 billion sale of Tianqi Lithium – were secondary ratings. Both companies were already listed in mainland China.

($1 = HK$7.8490)

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Reporting by Scott Murdoch; additional reporting by Clare Jim; Editing by Sumeet Chatterjee and Bradley Perrett

Our standards: The Thomson Reuters Trust Principles.

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