HONG KONG—Dalian Wanda Commercial Properties Co., the real-estate arm of Wanda Group, and BAIC Motor Corp., a Chinese car maker partly owned by Daimler AG , are seeking to raise a combined US$5.4 billion in initial public offerings in Hong Kong this month.
Dalian Wanda Commercial Properties, which is owned by Chinese billionaire Wang Jianlin, plans to raise up to USUS$3.8 billion by selling 600 million shares in an indicative price range of 41.80 to 49.60 Hong Kong dollars (USUS$5.39 to US$6.40) each, a person familiar with the situation said Sunday.
Meanwhile, BAIC Motor plans to raise up to US$1.57 billion by selling shares in an indicative price range of HKUS$7.60 to HKUS$9.80 each, another person familiar with the situation said Saturday, representing 6.4 to 8.3 times its forecast earnings for 2015. BAIC couldn’t immediately be reached for comment.
Both companies plan to start taking orders from investors Monday before listing in the city by the end of the year. Sentiment has recently improved toward Hong Kong IPOs.
China’s largest nuclear-plant operator, CGN Power Co., last week saw the retail tranch of its IPO more than 250 times oversubscribed and raised US$3.16 billion, after pricing the offering at the top end of the price range. Investors expect the firm will benefit from China’s power policy, which encourages clean energy use.
Dalian Wanda, which had a debt-to-equity ratio of 87.8 per cent as of the end of June, may also benefit from China’s surprise interest-rate cut last month.
Shares of many Hong Kong-listed real-estate developers, which are heavily indebted, have surged recently. Guangzhou-based developer Country Garden Holdings Co. has climbed about 9 per cent since the rate cut, while shares of state-owned property developer China Overseas Land & Investment have gained 16 per cent.
The price range for Dalian Wanda Commercial Properties represents a 47 per cent to 55 per cent discount to 2015 forecast net asset value, while peer China Resources Land , whose shares are up about 14 per cent since China’s rate cut, trades at a 7 per cent premium to forecast NAV, according to FactSet.
Dalian Wanda Commercial, which sells apartments and operates shopping malls and hotels, will list in the city Dec. 23. It will use the proceeds from the IPO to fund the development of property projects.
Dalian Wanda and BAIC have sold part of their IPOs to cornerstone investors, which agree to hold shares for a certain period once the firms have listed, to increase the likelihood of success of the offering. In Hong Kong, bankers can presell shares to cornerstone investors before the start of an official book building.
Dalian Wanda has secured sales of US$2 billion worth of shares, or 62 per cent of the deal, from 11 cornerstone investors. Kuwait Investment Authority, China Life Insurance Co. and Ping An Asset Management are buying US$300 million each, while Och-Ziff Capital Management is buying US$250 million.
Dalian Wanda, KIA, China Life, Ping An and Och-Ziff couldn’t immediately be reached for comment.
BAIC has locked in sale of about US$800 million worth of shares, or half the deal, from cornerstone investors. The identity of the cornerstone investors wasn’t immediately known.
HSBC Holdings PLC and China International Capital Corp. are lead banks for Dalian Wanda’s offering, while HSBC, Citic Securities International , Deutsche Bank and UBS AG are leading the BAIC offering, according to preliminary prospectuses.