Swire Properties shelves IPO plan

Swire Properties, one of Hong Kong’s biggest developers, said yesterday it had dropped a plan to raise more than three billion US dollars in a share issue because of worsening market conditions.
The property unit of blue-chip conglomerate Swire Pacific shelved the plan as shares on the Hong Kong stock and property indexes tumbled in response to moves by China to tighten credit on the mainland.
Swire Pacific, the largest shareholder of Cathay Pacific airline, announced the cancellation of the initial public offering (IPO), originally due for May 14, in a statement to the stock exchange.
“The company is naturally disappointed at this outcome but feels that it would be wrong to proceed... given the recent sharp deterioration in market sentiment,” chairman Christopher Pratt said in the statement.
Demand had been hit by a fall of more than five percent on the Hang Seng Index since the company began bookbuilding on April 26.
Market sentiment has been affected by concerns over Greece’s debt crisis and China’s demand Sunday that banks raise the amount of money they keep in reserve by 50 basis points to avoid a property bubble.
Fund managers said the IPO’s indicative price range was not especially attractive, as it translated into a narrow 5-14 percent discount to the company’s net asset value.
Parent company Swire Pacific said trading of its shares on the Hong Kong bourse would resume today after it was briefly suspended for the announcement.
Swire told a press conference on Sunday that it would offer 910 million shares in its developer unit at a price between 20.75 and 22.90 Hong Kong dollars (2.67 and 2.94 US dollars).
It also said it could choose to exercise an over-allotment option to sell an additional 136.5 million shares, raising up to 3.09 billion US dollars.
Two billion Hong Kong dollars in proceeds had been earmarked to fund existing projects in the city, mainland China and Britain.