China's Evergrande scraps $2.1 bln HK IPO

Chinese property developer Evergrande Real Estate Group Ltd scrapped its plan to raise up to $2.1 billion in a Hong Kong IPO after failing to generate sufficient investor interest, sources close to the deal said, adding further gloom to the market for capital-raising.

Several sources close to the deal had said in recent days that Evergrande was having a hard time drumming up orders for shares as Chinese property stock prices have tumbled, and the deal's withdrawal had been widely expected.

Evergrande adds to the roughly 65 companies globally that have scrapped or delayed IPOs worth about $23 billion since the start of the year, according to Thomson Financial data.

Evergrande's decision, made after bookbuilding from institutional investors closed in New York on Wednesday, came despite the roaring trading debut turned in by Visa Inc after it raised nearly $18 billion in the largest-ever U.S. IPO.

Shares in the credit card giant soared as much as 38 percent in New York on Wednesday in their first day of trading.

But Evergrande faced an uphill battle after once-hot Chinese property stocks have fallen deeply out of favour amid Beijing's numerous efforts to cool the property market and stave-off inflation.

Goldman Sachs , Credit Suisse and Merrill Lynch were the sponsors of the deal. Evergrande had extended by one day the subscription period for the retail portion of its IPO.

BIG DEALS SCRAPPED

Hong Kong was the third-busiest IPO market last year, after the Shanghai and London boards, but many of the biggest deals planned for this year have stalled.

Far East Consortium International Ltd <0035.hk> said on Wednesday it was delaying its planned Hong Kong listing of a real estate investment trust (REIT) of hotels, a deal that would raise up to $320 million, due to poor market conditions.

Shares in Far East Consortium tumbled nearly 10 percent by midday on Thursday, while the broader Hang Seng Index <.HSI> was down 3.6 percent. The index is down 24 percent since the start of the year.

Earlier this month, China Pacific Insurance <601601.ss> delayed plans to raise roughly $4 billion in a Hong Kong share sale due to poor market sentiment.

A handful of deals have succeeded.

On Saturday, Taiwan-based snack maker Want Want China Holdings Ltd raised $1 billion in a Hong Kong share sale when it priced its offering at the bottom of its target range.

China Railway Construction Corp <1186.hk><601186.ss> raised $5.4 billion in a dual Hong Kong and Shanghai listing this month but its Hong Kong shares now trade about 3 percent below their IPO price.

(US$1=HK$7.8)