China Vanke Co, the nation's largest publicly listed real estate developer, has received approval from its shareholders to raise up to 11.2 billion yuan (US$1.64 billion) from the public to fund housing projects across the country.
The Shenzhen-based company made the announcement in a filing released yesterday to the Shenzhen Stock Exchange.
Under an earlier announced plan, 9.2 billion yuan of proceeds from the share sale will be used to build 14 residential projects in cities, including Tianjin, Hangzhou, Dongguan, Shenyang and Shenzhen. The remaining 2 billion yuan will be used as working capital.
The country's real estate market has regained momentum in recent months and Vanke needs additional funds for further expansion, Xiao Li, vice president of Vanke, said at a shareholders' meeting on Tuesday in Shenzhen, Guangdong Province.
Vanke will also need capital for land acquisitions as its current land reserve only provides less than 3 years of development, Xiao said.
One analyst said the share sale is good news for the company and the property sector.
"Vanke's additional share sale plan, still pending approval from the China Securities Regulatory Committee, should have a positive impact on the company's future development," said Cui Juan, an industry analyst at China Minzu Securities Co. "It could also be good for the entire real estate industry because of Vanke's leading role in the domestic property market."
Vanke's property sales rose 30 percent on year to 40.7 billion yuan in the first eight months of this year amid robust home buying sentiment across the country.
Nationwide, the volume of homes sold during the eight-month period rose 45 percent on year while the value of those sales surged 70 percent, the National Bureau of Statistics said earlier this month. Investment in real estate development during the eight months rose 15 percent, up from an increase of almost 12 percent in the first seven months.
(Shanghai Daily September 17, 2009)