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Wind Info: More firms accessing funds from market

By Bi Xiaoning (China Daily)
Updated: 2009-08-04 08:12

With the rebound of the A-share market, listed companies have seized the opportunity to raise capital through additional share offerings.

Latest figure from financial provider Wind Info indicated that about 200 listed companies have charted plans for additional share offerings this year. Nearly 60 listed companies have so far raised about 133 billion yuan through share placement.

"It's not a surprise to see so many listed companies firming up plans when the market is rebounding," said Lu Junlong, analyst, China Finance Online. "Due to the sluggish stock market in 2008, many listed companies delayed their fund raising plans."

The country's benchmark Shanghai Composite Index rallied about 90 percent this year, making it the second best-performing stock market in the world. Accordingly, the number of listed companies that announced fund raising plans also increased month by month.

According to Wind Info, only eight companies had announced fund raising plans at the beginning of the year. The number showed a month-by-month upward trend and increased to over 40 in both June and July.

Aluminum Corp of China (Chinalco) led the list with plans to issue 1 billion shares for raising 10.99 billion yuan.

"It could be an era for industry integration and overseas acquisitions this year and in 2010. We might see more industry heavyweights utilizing the opportunities to raise funds to support their merger and acquisitions plans," said Lu.

The statistics also showed that the investors, who bought the additional shares earlier this year, could make more profits due to the low issue price. About 36 listed companies saw their shares soar over 50 percent since they implemented fund raising plans earlier this year. Shunfa Hengye Corp, a Hangzhou-based developer, saw its shares jump nearly 533 percent.

Related readings:  More listed companies aware that internal controls are key  Official: Transfer of state-owned shares may begin in August  Listed companies to transfer state-owned shares to Social Security Fund  2008 Annual Reports of Listed Companies

Recently, the country's leading real estate developers seemed quite active in raising funds, to support their land acquisition and expansion plans.

In May, Poly Real Estate Group Co got approval to raise up to 8 billion yuan through an additional share issue to fund eight projects. China Merchants Property and some listed developers have also jumped on to the bandwagon.

In July, about 10 listed developers, including Gemdale, announced fund raising plans. Once approved, they could raise about 20 billion yuan from the equity market.

"Since the stock market is buoyant and policy stable, the market could see more developers choosing share issues to raise funds in the near future," said Bai Hongwei, analyst, China International Capital Corporation.