* Swire Property IPO shelved due to market downturn -
* One of several global deals yanked from offering process
* Swire Pacific shares suspending, announcement pending
(Adds more analyst quotes, examples of pulled deals)
By Kennix Chim and Michael Flaherty
HONG KONG, May 6 The property unit of
conglomerate Swire Pacific (0019.HK) has pulled plans to raise
up to $2.7 billion through a Hong Kong initial public offering,
sources said as regional real estate stocks took a beating in a
Swire Properties, deep into its spin-off process, is one of
several deals in the last few days to be yanked or downsized,
as local stock and bond markets suffer from a combination of
Chinese government tightening measures to fears of further
financial troubles in Greece and the rest of Europe.
On Thursday, sources with direct knowledge of the matter
said Swire decided to pull the offering after the market
sell-off weakened demand. In a filing to the Hong Kong stock
exchange, Swire asked for trading in its shares to be
suspended, pending an announcement.
The sources did not want to be identified because the
announcement is not yet public.
"The market, globally, has been pretty volatile lately due
to negative news, such as Greece's debt problems," said Adrian
Ngan, an analyst at CCB International. "I'm not too surprised
that Swire is holding off plans right now, especially since its
size is quite huge and the pricing is relatively high."
India's Essar Steel [ESRG.UL], which had been looking to
issue a roughly $500 million U.S. dollar bond, put that deal on
hold on Thursday, a week after its sister company Essar Energy
cut the price of its London IPO.
China's New Century Shipbuilding withdrew its Singapore IPO
on Wednesday. [ID: nSGE644028]
In addition to malaise spreading across stock and bond
markets, the property sector itself is under major pressure,
particularly in Greater China.
Property shares have dominated short-selling activity which
has picked up to one-year highs.
Hong Kong stocks have dropped nearly 10 percent since
mid-April, hit by government measures to curb property prices
and measures to absorb excess market liquidity, including a
rise in bank reserve requirements unveiled over the weekend.
Swire Pacific, the property unit's parent, is a
conglomerate with businesses in aviation, property, shipping
and offshore services industries. Swire Pacific also owns
Cathay Pacific Airways (0293.HK), Hong Kong's dominant airline
and Asia's No. 5 by market value.
Swire Pacific shares were suspended on Thursday afternoon.
The stock fell 2.8 percent to end the morning session at
HK$81.05 before trading was halted. The company did not respond
to calls seeking comment.
Goldman Sachs (GS.N), HSBC (0005.HK)(HSBA.L) and Morgan
Stanley (MS.N) were underwriting the Swire Properties deal. The
banks declined to comment as well.
PROPERTY BUBBLE FEARS
Authorities in China and Hong Kong have been concerned with
fast-rising property prices fuelling worries of asset bubbles
forming. Over the past few months, the Hong Kong government has
repeatedly expressed concerns with rising property prices.
Some of its moves over the past few months include raising
taxes on luxury apartments, increasing land supply and
targeting irregular sales practices by developers.
Since the launch of the Swire Properties roadshow on April
26, shares of Singapore developer CapitaLand (CATL.SI) have
dropped 15.9 percent, while the Hang Seng Properties Index is
down 8.3 percent. Swire Pacific's shares dropped 15 percent.
Shares of Chinese developer Evergrande (3333.HK) fell 10
percent on Thursday
"The Swire Properties IPO is quite expensive. At 20-21
times PE (price to earnings), it is not surprising if they
decide to pull out," said Andrew To, sales director, Tai Fook
Securities Co Ltd.
(Additional reporting by Lee Chyen Yee, Vikram Subhedar and
Alison Leung; Editing by Lincoln Feast and Anshuman Daga)