What’s new: More than 20 Chinese developers have disclosed plans to sell new shares since China’s securities regulator eased restrictions on equity financing for the ailing industry last month.
Caixin’s calculation based on available data shows that 21 publicly traded property developers have announced intentions for stock offerings since the China Securities Regulatory Commission lifted a 12-year ban on developers’ equity financing Nov. 28.
Seven companies including Risesun Real Estate Development Co. Ltd., Sanxiang Impression Co. Ltd. and China Calxon Group Co. Ltd. have published preliminary fundraising plans, although key information such as prices and potential investors are still pending.
Three companies, including Shanghai Lujiazui Finance & Trade Zone Development Co. Ltd., China Merchants Shekou Industrial Zone Holdings Co. Ltd. and Gree Real Estate Co. Ltd. said they plan to sell shares to fund asset acquisitions.
Background: China has largely shut developers out of the stock market since 2010 as policymakers sought to prevent real estate enterprises from amassing cash for aggressive land purchases. The buying spree saddled the sector with crushing debt and led to a clampdown on borrowing, which contributed to the current slump.
The lifting of the ban on equity offerings by developers will allow real estate companies to raise money on the Chinese mainland and Hong Kong stock markets by selling shares through private placements for specific purposes such as debt repayment and acquisitions.
The policy is part of a so-called “three arrows” program, along with supports to developers’ bank borrowing and bond sales, to bail out the property market from a year-long liquidity crisis.
Developers have responded quickly to the policy change. But industry analysts said it will take time for the companies to benefit from the reopened financing channel because of the current market environment and weak investor confidence.
Contact reporter Han Wei (weihan@caixin.com)
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