Li Ka-shing plans city’s first yuan IPO
Reports say tycoon hopes to raise more than 10b yuan in first half of 2011
Hong Kong tycoon Li Ka-shing is preparing what is likely to be the city’s first yuan-denominated initial public offering (IPO) in the first half of next year, according to reports citing people familiar with the matter.
Billionaire Li, chairman of Cheung Kong (Holdings) Ltd, has hired Citic Securities International Co to lead the sale in a bid to raise more than 10 billion yuan through a real estate investment trust (REIT) backed by the Oriental Plaza development in Beijing, the Hong Kong Economic Times quoted anonymous sources as saying Wednesday. HSBC Holdings plc will help arrange the offering, the sources added.
Cheung Kong and its affiliate Hutchison Whampoa Ltd own 33.4 percent and 18 percent, respectively, of the Oriental Plaza – a large complex which includes hotels, commercial property and shopping malls.
“It would not be surprising if the rumor proves to be true,” said Linus Yip, an analyst at First Shanghai Securities. “If the IPO receives a good response, I believe more companies will follow suit.”
Cheung Kong rose 3.53 percent to HK$120.4 while Hutchison Whampoa declined 0.37 percent to close at HK$80.1 in Hong Kong trading Wednesday.
Meanwhile, Joseph Yam, the former chief executive of the Hong Kong Monetary Authority (HKMA) said at a public lecture in the city Wednesday that Hong Kong, as an international finance center, is ready to develop a yuan IPO market.
“The time for yuan-denominated IPOs in Hong Kong is now ripe,” Yam said, adding that supervision will be necessary in order to prevent the yuan becoming a tool to be exploited by international speculators.
Charles Li, chief executive officer of Hong Kong Exchanges & Clearing Ltd, in October had also expressed a desire to see the first yuan-denominated IPO in the city next year.
Yuan deposits in the city surged by a record 67.8 billion yuan in October to an all-time high of 217.1 billion yuan, according to the HKMA, spurred by anticipation of an appreciating yuan and the mainland’s first interest-rate hike in almost three years.
Nevertheless, Shanghai First’s Yip said that there are still a number of issues to take into account such as the daily cap per person on the physical exchange of the mainland’s currency in the city, which currently stands at no more than 20,000 yuan. He said it could impede investor enthusiasm, even if the city’s initial yuan IPO is deemed a success.
“The liquidity pool of yuan in Hong Kong is still not large enough yet to support a swarm of yuan stocks in the city,” Kelvin Lau, an economist at Standard Chartered Bank told China Daily.
“The first few yuan listings will primarily be seen as tests for the authorities to figure out any underlying problems. The number of yuan-denominated stock sales seen in the city’s bourse will still be limited next year,” he added.
China Daily
(HK Edition 12/23/2010 page2)
http://www.chinadaily.com.cn/hkedition/2010-12/23/content_11742223.htm