Swire scraps $2.7b property IPO
Friday, 7 May 2010
HONG KONG, May 6 (Reuters): The property unit of conglomerate Swire Pacific has pulled plans to raise up to $2.7 billion through a Hong Kong initial public offering, sources said as regional real estate stocks took a beating in a weak market.
Swire Properties, deep into its spin-off process, is one of several deals in the last few days to be yanked or downsized, as local stock and bond markets suffer from a combination of Chinese government tightening measures to fears of further financial troubles in Greece and the rest of Europe.
On Thursday, sources with direct knowledge of the matter said Swire decided to pull the offering after the market sell-off weakened demand. In a filing to the Hong Kong stock exchange, Swire asked for trading in its shares to be suspended, pending an announcement.
The sources did not want to be identified because the announcement is not yet public.
"The market, globally, has been pretty volatile lately due to negative news, such as Greece's debt problems," said Adrian Ngan, an analyst at CCB International. "I'm not too surprised that Swire is holding off plans right now, especially since its size is quite huge and the pricing is relatively high."
India's Essar Steel, which had been looking to issue a roughly $500 million US dollar bond, put that deal on hold Thursday, a week after its sister company Essar Energy cut the price of its London IPO.
China's New Century Shipbuilding withdrew its Singapore IPO Wednesday.
In addition to malaise spreading across stock and bond markets, the property sector itself is under major pressure, particularly in Greater China.
Property shares have dominated short-selling activity which has picked up to one-year highs.
Hong Kong stocks have dropped nearly 10 per cent since mid-April, hit by government measures to curb property prices and measures to absorb excess market liquidity, including a rise in bank reserve requirements unveiled over the weekend.
Swire Pacific, the property unit's parent, is a conglomerate with businesses in aviation, property, shipping and offshore services industries. Swire Pacific also owns Cathay Pacific Airways, Hong Kong's dominant airline and Asia's No 5 by market value.
Swire Pacific shares were suspended Thursday afternoon. The stock fell 2.8 per cent to end the morning session at HK$81.05 before trading was halted. The company did not respond to calls seeking comment.
Swire Properties, deep into its spin-off process, is one of several deals in the last few days to be yanked or downsized, as local stock and bond markets suffer from a combination of Chinese government tightening measures to fears of further financial troubles in Greece and the rest of Europe.
On Thursday, sources with direct knowledge of the matter said Swire decided to pull the offering after the market sell-off weakened demand. In a filing to the Hong Kong stock exchange, Swire asked for trading in its shares to be suspended, pending an announcement.
The sources did not want to be identified because the announcement is not yet public.
"The market, globally, has been pretty volatile lately due to negative news, such as Greece's debt problems," said Adrian Ngan, an analyst at CCB International. "I'm not too surprised that Swire is holding off plans right now, especially since its size is quite huge and the pricing is relatively high."
India's Essar Steel, which had been looking to issue a roughly $500 million US dollar bond, put that deal on hold Thursday, a week after its sister company Essar Energy cut the price of its London IPO.
China's New Century Shipbuilding withdrew its Singapore IPO Wednesday.
In addition to malaise spreading across stock and bond markets, the property sector itself is under major pressure, particularly in Greater China.
Property shares have dominated short-selling activity which has picked up to one-year highs.
Hong Kong stocks have dropped nearly 10 per cent since mid-April, hit by government measures to curb property prices and measures to absorb excess market liquidity, including a rise in bank reserve requirements unveiled over the weekend.
Swire Pacific, the property unit's parent, is a conglomerate with businesses in aviation, property, shipping and offshore services industries. Swire Pacific also owns Cathay Pacific Airways, Hong Kong's dominant airline and Asia's No 5 by market value.
Swire Pacific shares were suspended Thursday afternoon. The stock fell 2.8 per cent to end the morning session at HK$81.05 before trading was halted. The company did not respond to calls seeking comment.