Mainland property developers are returning to Hong Kong's capital markets and resuming their IPO plans. Shanghai-based Glorious Property was the first to do so, raising approximately US$1.3bn during the national day holiday. Then came Powerlong Real Estate's US$355m IPO in mid-October. Now it is the turn of Evergrande Real Estate.
Evergrande yesterday initiated the roadshow for its Hong Kong IPO, which could raise up to US$780m. This is the second time that the company has tried to go public - in March 2008, it cancelled its roadshow due to global market conditions.
Evergrande's international legal advisor Sidley Austin, PRC legal advisor Commerce & Finance and Cayman legal advisor Maples and Calder have been waiting alongside the issuer for the right time to re-launch the IPO. Legal advisors to the underwriters, Freshfields and King & Wood, will also soon celebrate the final completion of the long-running transaction.
Commerce & Finance has been a long-standing legal advisor to Evergrande. In 2007, the firm advised on Evergrande's US$897m debt-and-equity financing, a complex transaction that was selected as a finalists for "Real Estate & Construction Deal of the Year" at the 2008 ALB China Law Awards. Freshfields, meanwhile, has been involved in all three property developer IPOs this year, representing underwriters.
Many industry observers see the three IPOs as the prelude to a new wave of mainland-based property developers to be listed in Hong Kong. Over 20 other property developers are reportedly preparing for raising funds in the capital markets, including Shenzhen's Excellence Real Estate Group, Chongqing's Longfor, and Guangzhou's Star River.
Companies from the capital-intensive sector have always been among the most active clients for law firms. Even in the downturn, firms had a significant number of mandates to work for property developers' debt restructuring, senior notes buy-back, bonds issuance and bank loans exercises. Leading real estate legal practitioners expect that as the market continues its upward trend, more companies will raise funds and start to buy new lands and assets.
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