Cheung Kong chairman plans HK's 1st yuan IPO

HONG KONG - Developer Cheung Kong plans to launch the first yuan IPO in Hong Kong next year, a move that could set the stage for other companies to raise yuan funds in the world's hottest IPO market.

Hong Kong, an IPO hotbed that raised US$50 billion this year, has been China's fast-growing offshore market to internationalise the yuan, with borrowers and investors keen to raise funds via instruments such as dim sum bonds.

Cheung Kong is one of Hong Kong's largest property developers owned by billionaire Li Ka-shing.

'This offers another variety of instrument in this fast growing market,' said Frances Cheung, a senior strategist at Credit Agricole in Hong Kong.

'We have only seen bonds and money market instruments so far and introducing equities will ensure that activity picks up in the secondary market.' Cheung Kong plans to spin off and list a rental property in China through a real estate investment trust (Reit) to raise more than 10 billion yuan (US$1.5 billion) in the first half of 2011, the Hong Kong Economic Times quoted market sources as saying.

The rental property included hotels, commercial properties and shopping malls, the Chinese language paper added. Banking sources confirmed the deal.

Cheung Kong officials were not immediately unavailable for comment.

The IPO has got the greenlight from relevant Chinese authorities, while Citic Securities and HSBC are handling the deal, the paper said. A banker who spoke on condition of anonymity said he did not foresee any regulatory hurdles from China and Hong Kong.

The Hong Kong exchange's systems are ready for a yuan listing, said an exchange official who declined to be identified as he was not authorised to speak to the media.

'There is no restriction on the type of currencies in share trading on the stock exchange under the listing rules,' he said.

Hong Kong Exchanges and Clearing Ltd Chief Executive Charles Li had said earlier that Hong Kong could see initial public offerings denominated in yuan as early as next year as Beijing moves to internationalise China's currency. -- REUTERS