Complete Property Market Updates of Singapore

April 30, 2008

Temasek comfortable with stake in China property developer

Filed under: 1 — Propertymarketupdates @ 4:04 am

TEMASEK Holdings has said it is ‘comfortable’ with its investment in a China property developer that is seeking funds after scrapping plans for an initial public offering (IPO).

The Singapore investment company, along with Deutsche Bank and Merrill Lynch, are in talks with Guangzhou-based Evergrande Real Estate Group for a private placement reportedly worth US$400 million to US$500 million (S$541 million to S$676 million), the South China Morning Post has reported.

The three investors are believed to have already bought a combined US$400 million worth of convertible bonds ahead of a US$2.1 billion public share sale last month, the Hong Kong newspaper said, citing unnamed sources.

The private stake sale came after stock market turmoil and fears over Beijing’s efforts to cool China’s real estate market sank interest in Evergrande’s IPO.

Mainland developers are facing a tightening financial market as a global credit crunch has made banks less willing to lend to builders, Reuters reported.

At the same time, volatile market conditions have forced the withdrawal or postponement of several IPOs in Hong Kong.

‘Temasek is comfortable with its level of shareholding,’ a company spokesman said yesterday. The official, however, declined to disclose the size of Temasek’s investment in Evergrande.

Any additional shares taken up by Temasek and the other financial investors will likely be priced below their original investments, reported the Post.

‘The partners have agreed to take up a larger stake, but some details are still pending,’ a source said, adding that the deal would be a win-win solution for the developer and its partners.

‘Evergrande will have new money for development, while the three investors can get a larger piece of the firm and lower their average acquisition cost.’

Evergrande was recently ranked as one of China’s top 10 real estate companies. The poll was based on the companies’ scale, profitability, growth, financial liquidity and operational efficiency.

Evergrande is a potential partner of American real estate mogul Donald Trump, who is seeking to enter China’s property market. The company has land reserves of 45.8 million sq m in gross floor area in plots across the country.

Of these, two-thirds are being developed in 33 residential projects in 19 cities.

Source : Straits Times – 24 Apr 2008

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