COLI Gets $100.8 Million Via Private Sale of Shares
March 31, 2011
HONG KONG -- China Overseas Land & Investment Ltd., known as COLI, raised HK$780 million (US$100.8 million) from institutional investors through a private placement of shares. The Chinese state-controlled concern intends to use the proceeds from the deal, which is part of a capital increase, for investment in infrastructure projects in China. ING Barings in Hong Kong said it bought the block of 390 million shares from shareholder China Overseas Holdings Ltd., and then sold them internationally to institutional investors at HK$2 each. COLI's shares closed in Hong Kong at HK$2.125 Thursday, down 2.5 Hong Kong cents, which means institutional investors bought the stock at a nearly 6% discount to the market price. ING Barings, which is a securities unit of ING Groep NV of the Netherlands, carried out the private placement after the close of the Hong Kong stock market Thursday. COLI listed its shares on the Hong Kong Stock Exchange in August 1992. But China Overseas Holdings, a unit of China State Construction Engineering Corp., retained 75% of COLI's shares. Thursday's share sale is equivalent to about 10% of the company's share capital. But COLI will shortly sell 390 million new shares to China Overseas Holdings, thus completing the transaction to raise new equity. COLI is engaged in property development and investment in Hong Kong, Shenzhen, Guangzhou and Shanghai. The company has built up its land bank in major Chinese cities and plans to invest the proceeds from Thursday's deal in infrastructure projects in northern and eastern China. The stock is trading at about 6.4 times prospective 2011 earnings, based on forecasts published by the Estimate Directory. The latest edition of the directory shows that nine out of 12 of the brokers who cover the stock have a ``buy'' recommendation on it. In a report, ING Barings analyst Chrissy Lejeune recently flagged COLI as a buy, predicting that it ``will be a major beneficiary of the 2012 transition as it is becoming the No. 1 recipient of government construction contracts due to its background as the Hong Kong subsidiary of the Ministry of Construction.'' The report adds that COLI shares could attract a higher stock-market rating, partly because of the company's transformation from a second-tier property developer to a conglomerate with interests in infrastructure, construction, property and building materials.
