Li Ka-shing to plan Yuan IPO in Hong Kong

The Pak Banker - - Company & Boss News -

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

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