December 1, 2014 / 11:17 AM / 4 years ago

China developer Dalian Wanda nears $6 billion listing after exchange nod

HONG KONG (Reuters) - Chinese developer Dalian Wanda Commercial Properties Co has won approval from Hong Kong’s stock exchange for an initial public offering (IPO), which could be worth up to $6 billion, according to a source with direct knowledge of the matter.

A man shows the way for Wang Jianlin (R), Chairman of Wanda, during a meeting with Tencent Chief Executive Officer Pony Ma and Baidu Inc. Chairman and CEO Robin Li, in Shenzhen, Guangdong province, August 29, 2014. REUTERS/Alex Lee

Dalian Wanda Commercial Properties is the world’s second-largest developer of shopping malls and office buildings. It plans to use most of the proceeds from the IPO - which would be the largest new listing in Asia, excluding Japan, in four years - to fund 10 projects in China as it seeks to exploit increasing urbanization.

The company, a unit of billionaire Wang Jianlin’s Dalian Wanda Group, received the go-ahead on Monday from the listing committee of the exchange, said the source, who declined to be named because the decision is not yet public.

It will start gauging investors’ interest for the IPO from Wednesday, with a roadshow starting on Dec. 8, pricing slated for Dec. 15 and its planned market debut a week after that, the source added. It was not clear what stake it would be selling.

The IPO would be the largest in the Asia-Pacific region, excluding Japan, since AIA Group Ltd’s (1299.HK) $20.5 billion listing in October 2010, adding to a raft of big listings set to make for a busy end of 2014 in equity capital markets.

It will come on the heels of an upcoming Hong Kong listing of up to $3.2 billion by CGN Power Co. Ltd, China’s largest nuclear power producer, and a planned IPO of up to $1.5 billion from BAIC Motor, part-owned by Germany’s Daimler AG (DAIGn.DE), before the end of the year in the city.

State-owned health insurer Medibank Private Ltd (MPL.AX) raised $4.9 billion in an IPO in Australia last month, while telecoms group Jasmine International PCL launched last week an up-to-$1.8 billion offering for an infrastructure fund for its fibre optic cable network in Thailand.

URBANIZATION

Dalian Wanda Commercial Properties owns 178 property projects that include shopping malls, high-end hotels, office towers and residential buildings.

It ranks behind only Simon Property Group Inc (SPG.N), the largest U.S. mall owner and world’s biggest commercial property developer, in terms of property square-footage, it said in its draft IPO prospectus, citing data from real estate consulting firm DTZ.

It plans to use 90 percent of proceeds to fund the development of 10 projects across China. The developer is betting continued urbanization in the country will drive traffic and sales in its shopping malls and residential apartments.

China’s State Council expects the urbanization rate in the country to reach 60 percent of the population by 2020 from 52.6 percent in 2012, with each percentage point increase adding 13 million people to Chinese cities, Dalian Wanda said in the draft prospectus.

The company posted profit of 4.92 billion yuan ($800 million) in the six months to June 2014, a 51 percent plunge from a year earlier as sales dropped to 23.3 billion yuan from 31.8 billion yuan. The decline was mostly due to lower sales of residential properties and a fall in the fair value of investment properties.

China International Capital Corp (CICC) and HSBC were hired as sponsors of the IPO, with Bank of America Merrill Lynch, BOC International, Goldman Sachs and UBS also leading the transaction, Thomson Reuters publication IFR has reported.

Editing by Denny Thomas and Pravin Char

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