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China Securities Regulatory Commission (CSRC) has rejected the application of real estate company Beijing Capital Land to issue up to 1.2 billion A shares.
The Beijing-based company announced on Friday that it had received a verbal notice from the securities watchdog that its A share issue proposal was turned down.
"CSRC did not give an explanation for the rejection, so we were not sure of the reason," a company spokeswoman said yesterday.
However, she said that the State seeking to maintain macro economic control might have impacted on the decision.
As the authorities tightened the credit tap to sectors including real estate in an attempt to cool down the economy since the second half of last year, it has been harder for real estate companies to acquire funding.
But the company would try the A share listing later, she said.
The refinancing plan of Beijing Capital Land, a subsidiary of the State-owned Beijing Capital Group and a flagship in Beijing's real state business, came one year after its initial public offering (IPO) in Hong Kong last June.
It announced in February that it would apply to come back to the mainland capital market and issue up to 1.2 billion A shares to raise about 3 billion yuan (US$362 million).
As proposed, the proceeds would be used to develop its property projects in Beijing, which mainly include a commercial center and a commercial and residential complex in the downtown.
These two projects are comparatively developed and have relevant land use certificates, so they can seek other financing channels even without the funding from the stock market, the company spokeswoman said.
Partnership with foreign strategic investors is also a means of financing. Singapore's GIC Real Estate Pte Ltd, who holds 9.8 percent in Beijing Capital Land, has been jointly developing two luxurious housing projects in Beijing with the company.
However, some analysts also said that it is still uncertain whether the authorities' control on funding supplies to some overheating sectors is the major reason for CSRC's rejection on the A share offering application of Beijing Capital Land.
"We can still see some real estate companies have had their financing proposals passed over during the past six months," said Zhang Yan, an analyst with China Securities Co.
Some launched IPOs and some were allowed to issue additional shares and convertible bonds.
So it is possible that Beijing Capital Land may have failed to meet some A share issue criteria, though that is uncertain too, Zhang said.
(China Daily July 27, 2004)
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