Warburg Pincus-Backed Chinese Developer Raises $258M in HK IPO

Sunshine 100 China Holdings Ltd, a commercial and residential real estate developer backed by US private equity firm Warburg Pincus had a low-end debut on the Hong Kong Stock Exchange last week as the company’s IPO came in  at the bottom of pricing expectations.

Sunshine 100 raised HK$2 billion (US$258 million) after pricing its 500 million share offering at HK$4.00 per share, compared to marketing range of HK$4.00 to HK$4.80 each, according to a report from Reuters.

The low-end pricing comes as housing prices in China’s second and third tier cities have grown at much lower rates than in the major cities in recent months. Many analysts have predicted tough time for home sales in China’s emerging cities this year, and the commercial real estate sector in cities such as Tianjin is also widely seen as overbuilt.

The firm, which was founded in 1994 with a focus on second- and third-tier cities, has projects in 16 cities including Tianjin, Chongqing, and Wuhan.

Warburg Pincus Still the Majority Owner

Warburg Pincus linked up with Sunshine 100 in 2006 to invest $25 million in projects in Chengdu, Shenyang, and Liaoning province. Since that time the private equity firm has invested an additional of $80 million.

Before the IPO, Sunshine 100 was restructured so that Warburg Pincus now owns a 5.17% stake in the company following the completion of the sale.

Sunshine 100 plans to use the majority of the proceeds to buy new projects or land in China with a focus on business complexes and residential communities, according to a term sheet for the sale. The company is only the second mainland developer to IPO in Hong Kong this year, following the debut of Redco Properties Group Ltd., which raised US$129 million in January.