Li Ka-shing to plan Yuan IPO in Hong Kong
HONG KONG: Li Kashing, Hong Kong's richest man, is preparing what may be the first yuan-denominated initial public offering in the city in the first half of 2011, said two people with knowledge of the matter.
Li, 82, hired Citic Securities International Co. to lead the sale of more than 10 billion yuan ($1.5 billion) of shares in a real estate investment trust backed by the Oriental Plaza development in Beijing, said one of the people, who declined to be identified because the information is private. HSBC Holdings Plc will help arrange the offering, the people said.
Hong Kong Exchanges & Clearing Ltd. Chief Executive Officer Charles Li has proposed allowing yuan-denominated share sales in the city. Chinese-currency deposits at Hong Kong banks swelled to a record 217.1 billion yuan in October, according to Hong Kong Monetary Authority data.
"If reaction to the IPO is good, it may very well create a trend for other Hong Kong developers to follow," said Lee Wee Liat, a Hong Kongbased analyst at Samsung Securities Ltd.
Companies have sold more than 62 billion yuan of bonds denominated in the Chinese currency in Hong Kong since 2007, according to a Dec. 20 Bank of China (Hong Kong) Ltd. statement.
Winnie Cheong, a Hong Kong-based spokeswoman for Li's Cheung Kong (Holdings) Ltd., didn't immediately return phone calls seeking comment. Joyce Ho, a spokeswoman at Citic Securities International in Hong Kong, said the firm doesn't comment on market rumors. Maggie Cheung, an HSBC spokeswoman in the city, declined to comment. Chinese-language newspaper Hong Kong Economic Times reported Li's plan earlier.
Cheung Kong shares rose 3.4 percent to HK$120.20 as of 3:57 p.m. in Hong Kong trading.
Cheung Kong, the developer controlled by Li, owns 33.4 percent of the Oriental Plaza and Hutchison Whampoa Ltd., 49.9 percent owned by Cheung Kong, has 18 percent, according to the companies' 2009 annual report.
Li built the company into Hong Kong's second-biggest developer by market value after he began buying property in the city in 1967 when riots tied to China's Cultural Revolution caused land prices in the city to collapse.
Lorraine Chan, a spokeswoman for the Hong Kong bourse, declined to comment on the proposed offering. The exchange is "ready to support the listing, trading and clearing of RMB-denominated products in Hong Kong," she said in an e-mailed response to questions, referring to renmin- bi, the yuan's other name.
Hong Kong should promote yuan-denominated IPOs, Joseph Yam, former chief executive of the HKMA, said in a public lecture in the city today. Hong Kong is ready to develop a yuan IPO market, Yam said.
Oriental Plaza, covering an area of 100,000 square meters ( 1.1 million square feet), is situated along Beijing's Changan Avenue in the heart of the city. It consists of eight grade-A office towers, a shopping mall, a Grand Hyatt Hotel, and serviced apartments, according to its website.
Shareholders will be selling existing stock in the Libacked REIT, said one of the people. More banks may be added to the sale, the people said.
"This will provide an alternative funding channel for Cheung Kong's development in mainland China," said Samsung's Lee. "Clearly in the next five to seven years mainland China instead of Hong Kong will be the main growth engine for a developer the size of Cheung Kong."
After arriving in Hong Kong as a refugee from China in 1940, Li swept factory floors to survive during the Japanese World War II occupation of the city between 1941 and 1945. After the war, he opened a plastic-flower factory and then started buying real estate in the city. -Bloomberg