Hong Kong-based real estate developer Sino Land saw its shares plunge as much as 21 percent in its biggest Wall Street debut by a Southeast Asian company, stalling an initial public offering that had been touted by analysts as India’s Alibaba.
The weakness in Sino Land’s Hong Kong shares weighed on the Hang Seng Index, whose losses wiped out about $48 billion of market value. The valuation of the company, South China Morning Post reported, was $8.5 billion at the open, valuing Sino Land and its 100 billion yuan ($16.7 billion) in assets at a fraction of the boom in housing sales in China.
Sino Land’s IPO values it at $8.5B at the open, valuing the company and its assets at a fraction of the boom in housing sales in China. pic.twitter.com/lXZjqNf09J — Joshua Rozenberg (@JoshuaRozenberg) January 29, 2018
The company is part of a raft of state-backed firms that have raised billions of dollars by listing in Hong Kong this year. Sino Land had priced its initial public offering at the top of the range, and its debut had been forecast to be one of the biggest IPOs this year, surpassing the $4.6 billion raised by online retailer IndiaPLN in June.
The first company to list in Hong Kong since new measures were introduced in November to curb financial volatility was troubled metals producer Galaxy Resources, the latest in a string of junior resources companies to seek a stock market listing on mainland China.
The investor response to the London Stock Exchange-listed company disappointed financial advisers working on the deal. Barclays estimated the selling price as close to $12 a share than the company’s own pricing range of $11.50 to $13.25.
Analysts had expected the offering to go well in a part of Asia still rebounding from a global slump last year. China-based property developers in Hong Kong have outperformed their mainland peers in 2017.
Sino Land, which is controlled by conglomerate China’s Baoneng Group, sold a record 17.9 billion Hong Kong dollars ($2.3 billion) of shares, while buyers also offered 4.3 billion. The company plans to use the proceeds to help fund its new projects and increase its cash reserves.
The Hang Seng Index was down 2.5 percent by 2:40 p.m. in Hong Kong. Sino Land’s share price fell to HK$13.60 in trading.
Sino Land founder and chief executive officer Ma Siping is exiting the company through an over-allotment of the IPO. He will be replaced as CEO by Zhang Xiting, a representative director of Baoneng Group.
The firm is controlled by Baoneng Group, which owns a majority of the Hong Kong-listed vehicle. About 75 percent of Baoneng shares are in the hands of its employees, which limit the firm’s ability to limit the further decline in the share price, analysts say.
Click here to read more on South China Morning Post.