Developer's move fails to dent investor interest in mainland property stocks
Shui On Land is expected to face short-term financing pressure following its decision this week to shelve a $7.9 billion initial public offering as it seeks a way to cover the $4 billion yuan relocation costs at a project in Shanghai.
The company, which has projects in Shanghai, Hangzhou, Wuhan and Chongqing, announced the decision to postpone the share sale on Wednesday due to deteriorating market conditions.
However, it said in a statement that it would be looking for an opportunity to relaunch the offering.
Shui On was offering 1.05 billion shares at between $5.60 and $7.55 each. On Sunday, it said the international tranche - 90 per cent of the deal - had been covered. But bankers said orders had been put in at the low end of the price range.
Analysts and fund managers said Shui On was in immediate need of cash to resettle existing residents at the mixed-use Taipingqiao project in Shanghai and that the postponement of its share sale would put the company under funding pressure.
'It is certainly under pressure since the company needs the money to relocate residents. It requires cash and no financing is allowed,' said an analyst.
