Vast’s hometown of Langfang seems to special in real estate oddities
A Chinese real estate developer on the brink of listing on the Hong Kong Stock Exchange took the unusual step of declaring to investors that its operations were likely to be comprised by corruption.
But buyers snapped up the stock anyway.
As noted in The Wall Street Journal, China VAST Industrial Urban Development, an industrial real estate planning firm that will begin trading on the Hong Kong exchange today, noted in its prospectus that “bribery and other misconduct which may be committed by our employees or third parties may be difficult to prevent or deter on a timely basis, or at all, despite our internal control and corporate governance practices.”
Despite the warning and some 2012 results that saw the company’s revenues fall by 60 percent, the developer of what it calls “industrial towns” saw local investors snap up 97 percent of the retail portion of its IPO, which was priced at HK$3.10 ($0.40) per share, according to an account in the South China Morning Post.
The company quickly reallocated the unsubscribed 3 percent to the international portion of its offering, which was said to be oversubscribed, even during China’s current real estate downturn.
The IPO had reserved 31.97 million shares for retail investors, and after the reallocation, 90.25 percent of the total offering will be made available to international buyers. The IPO is expected to raise a net of HK$927.1 million ($119.6 million) for the company which built its first industrial park in Langfang, Hebei province in 2005.
Everyone knows crime doesn’t pay, but sometimes corruption just might.
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