(Shenzhen Daily)
Updated: 2007-07-31 12:43

Shanghai-listed developer Poly Real Estate Group Co will issue up to 350 million shares to raise 19.42 billion yuan (US$2.6 billion) to fund expansion.

The offer comes as property developers are racing to raise money from domestic and Hong Kong capital markets to cash in on high-flying share prices as a result of runaway housing prices on the mainland.

“Poly is a fund favorite. The share offer would be easily taken up,” said a fund manager with a Sino-foreign mutual fund house in Shanghai.

“The current market environment is very conducive for major property companies on the stock market,” said the fund manager, who asked not to be identified because domestic securities rules bar asset managers from publicly commenting on individual stocks.

Poly Real Estate, based in Guangzhou, said in a statement Friday that it would issue up to 350 million new shares at 55.48 yuan each, an 11 percent discount to its closing price Thursday.

Proceeds will be used to fund nine new projects with an estimated total cost of 13.4 billion yuan, the company said, adding that the offer would account for as much as 24 percent of its expanded share capital and take place Aug. 1.

The company sold 942,600 square meters of property projects in the first half of this year, double the year-earlier’s level as sales revenue soared 167 percent to 8 billion yuan.

Zhao Qiang, an analyst at China Everbright Securities, warned that investor interest in the offer could be limited by the bull run in Poly’s share price and the government’s efforts to cool property speculation, driven in part by widespread expectations of further appreciation of the yuan.

Buoyant stock prices were driving more property firms to tap the domestic stock market to help fund purchases of land as real estate prices spiral upwards amid rising competition among the legions of local developers, he said.