China Merchants Property squeezes price of proposed share sale

China Merchants Property Development, a subsidiary of China Merchants Group, which is seeking to raise fresh funds through a private placement, has reduced its offering price by nearly 27%, citing the recent crash in property stock prices and Beijing's tightening policies to curb the country's overheated housing market. At the revised price, the Shenzhen-listed developer could raise Rmb5.15 billion ($753 million).

The placement was first announced in July last year but the deal has been grounded ever since as the issuer wouldn't lower the offering price amid a volatile market and the Chinese authorities have been cautious in approving the developers' fundraising plans.

The price cut may seem like a big discount, but may not be enough for the placement to go through given the current market environment and the prevailing share price; the deal looks likely to remain on hold.

China Merchants Property is now offering 250 million A-shares at Rmb20.60 per share to no more than 10 designated investors, the company said in a statement filed with the Shenzhen Stock Exchange yesterday, without giving the names of the institutions that would arrange the deal. The offering comes with a three-year lockup.

The company initially planned to sell 200 million A-shares at Rmb28.12 each, for a total deal size of Rmb5.62 billion ($822 million).