Developers plan share offerings

Mainland-listed Xinhu Zhongbao Co and Guangdong Highsun Group Co announced plans Friday to conduct private share placements, news which some believe could mark a further thawing of the government's three-year prohibition against equity fundraising within the property sector.

Specifically, Shanghai-listed Xinhu Zhongbao Co said it intends to bring in 5.5 billion yuan ($897.36 million) through the sale of 1.79 billion shares. According to an exchange filing, the raised funds will be earmarked for reconstruction of shantytowns in Shanghai.

Meanwhile, Shenzhen-listed Guangdong Highsun Group Co laid out a blueprint to collect 834 million yuan through the private issuance of no more than 100 million shares in order to finance commercial housing projects.

Both programs are still pending regulatory approval, yet the developers have shown signs of optimism about their chances of obtaining the go-ahead from authorities. "The regulators are quite supportive of our plan, after communicating with them for quite a long time," an officer from one of the companies was quoted as saying in an article published Saturday by IFR Asia.

"These plans have symbolic significance," Xue Jianxiong, a senior real estate analyst with E-House China, told the Global Times Sunday. "They have definitely aroused strong expectations about a possible policy shift concerning developers' access to the capital market."

In April 2010, the China Securities Regulatory Commission (CSRC) stopped approving new share floats from developers and other property related companies in accordance with government policies aimed at cooling the real estate market.

However, the CSRC said Friday at a regularly scheduled news conference that it has not altered the basic tone of the refinancing stance it introduced in June, the 21st Century Business Herald reported Saturday. At that time, the commission stated that it would reject listing, refinancing and asset restructuring applications from property developers involved with irregularities, such as land speculation or the hoarding of land or homes in order to inflate prices. These remarks were widely seen as a softening of the commission's attitude toward refinancing limitations placed on developers.

At a meeting held by the Political Bureau of the Central Committee of the Communist Party of China last week, central authorities announced that they will continue to promote the steady and healthy development of the country's property market, according to statements released on July 30.

Yet, since no mention was made concerning further tightening, Xue suggested that the country's top leaders could be willing to give freer rein to market forces.

In addition to Xinhu Zhongbao and Guangdong Highsun, many believe that several other listed property firms are also gearing up for equity issuance schemes of their own.

Since the start of July, a number of developers - including Sundy Land Investment Co, Shanghai Jinfeng Investment Co and Guangzhou Donghua Enterprise Co - have suspended themselves from trading due to "possible major events," which some investors believe hints at the possibility of refinancing or restructuring.