2010年5月7日星期五

Swire Properties Shelves $2.7 Billion Hong Kong Initial Offer

"Swire Properties Shelves $2.7 Billion Hong Kong Initial Offer | AboutHK.Com - More Information About HK"

Bloomberg

Swire Properties Shelves $2.7 Billion Hong Kong Initial OfferSwire Properties Ltd., landlord to Time Warner Inc. in Hong Kong, shelved its plan to raise as much as HK$20.8 billion ($2.7 billion) in an initial public offering as a widening government-debt crisis battered the IPO market.

The decision was made after considering “the deterioration in market conditions,” the company’s parent Swire Pacific Ltd. said in a statement to the Hong Kong stock exchange yesterday. Swire Pacific will resume trading today from 9:30 a.m. local time after it suspended share transactions yesterday, it said.

The postponement came as concern that Greece’s bailout may have to be extended to other indebted nations sent the MSCI World Index of equities to its biggest three-day decline since March 2009. Billionaire Ron Burkle’s Americold Realty Trust shelved this year’s largest U.S. IPO yesterday, while Smile Brands Group Inc. also pulled its initial sale.

“The company is naturally disappointed at this outcome but feels that it would be wrong to proceed with the proposed spinoff,” Swire’s Chairman Christopher Pratt said in the statement. “Consideration was given to amending the terms of the global offering, but it was felt that this would undervalue the world class assets of Swire Properties.”

Swire Properties, the biggest commercial landlord in eastern Hong Kong island, pulled the sale three days after it published the prospectus, as the Hang Seng Property Index headed for its fourth straight weekly decline.

Real-Estate Agents

Government measures to increase supply and clamp down on marketing tactics of residential real estate agents also hurt demand for Swire Properties, Credit Suisse Group AG analyst Cusson Leung said before the announcement.

Asian stocks dropped for a fourth day yesterday, erasing this year’s gains in the MSCI Asia Pacific Index, on concern Europe’s debt crisis and China’s property curbs will slow the global economic recovery. The Hang Seng Index slid 1 percent, extending its loss this week to 4.6 percent. Swire Pacific fell for an eighth straight day before trading was suspended.

“A strategic pull-off under current market conditions is a wise thing to do,” Hong Kong-based Danny Yan, a portfolio manager at Taifook Asset Management Ltd., which oversees $400 million, said. “Not only are the shares’ valuations a bit stretched, property prices are also under pressure.”

The Wall Street Journal reported earlier that Swire Properties pulled its IPO.

‘Good Interest’

The company got “good interest from the roadshow,” said Andrew Sullivan, a sales trader at MainFirst Securities Hong Kong Ltd. Still, “investors remained price sensitive. It was always going to be priced towards the low end. With the move in the last couple of days, investors would have been looking for the pricing to be dropped by another three, or four, or five percent maybe. That’s probably just too much for the company.”

Swire Properties shelved its IPO a day after London-based Prudential Plc delayed its $21 billion rights offering. U.K. regulators are looking at whether Prudential, which is buying New York-based American International Group Inc.’s main Asian unit, will have sufficient capital as a combined company.

The postponement of the sale may mark a “sharp cool-off” in the broader IPO market, Taifook’s Yan said before the announcement. “Prudential is doing the same thing. The global market is short of money.”

Relative Value

Swire Properties planned to sell 910 million new shares, equivalent to a 13.79 percent stake, between HK$20.75 and HK$22.90 apiece, according to the company’s prospectus.

The price range valued Swire Properties at 31.4 times to 34.6 times this year’s earnings estimated by the banks arranging the sale, two people with knowledge of the IPO said last month.

Hongkong Land Holdings Inc., one of the biggest office landlords in the city’s financial hub, trades at 15.89 times this year’s earnings per share in Singapore, while Hong Kong- listed Wharf (Holdings) Ltd. is valued at 16.63 times, according to Bloomberg data.

Rental income from Hong Kong offices and shops accounted for 84 percent of Swire Properties’ total revenue of HK$8.19 billion in 2009, according to Bloomberg’s calculations of information in its prospectus.

“The problem is the whole market’s valuation is down, all the developers have dropped” even though Swire Properties derives most of its income from offices and shops, Credit Suisse’s Leung said.

Airlines, Coca-Cola

Created as a trading company in London in 1816, Swire Pacific owns 42 percent of Cathay Pacific Airways Ltd., Hong Kong’s biggest carrier, and also bottles Coca-Cola in China and supplies offshore oil rigs.

Americold, the Atlanta-based warehouse operator owned by Burkle’s Yucaipa Cos., pulled its $660 million sale yesterday. Smile Brands, the Santa Ana, California-based provider of support services to dental groups, shelved a $132 million IPO.

--With assistance from Sophie Leung and Hanny Wan in Hong Kong and Michael Tsang in New York. Editors: Philip Lagerkranser, Suresh Seshadri.

To contact the reporters on this story: Chia-Peck Wong in Hong Kong at cpwong@bloomberg.net This e-mail address is being protected from spambots. You need JavaScript enabled to view it ; Bei Hu in Hong Kong at bhu5@bloomberg.net This e-mail address is being protected from spambots. You need JavaScript enabled to view it .

To contact the editor responsible for this story: Andreea Papuc at apapuc1@bloomberg.net

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