Recruiting in China

SOHO China Ltd, a Beijing-based property developer, hired Goldman Sachs Group Inc and HSBC Holdings Plc to revive a Hong Kong initial public offering, people with direct knowledge of the transaction said.

SOHO China may raise US$400 million by June to finance new projects, Bloomberg quoted the people, who declined to be identified before a public announcement. Company spokeswoman Wang Chunlei declined to comment.

Mainland developers are tapping the Hong Kong stock market to fund new properties as the government tries to limit bank lending to the industry. China has restricted land supply, curbed loans to real estate companies and imposed new taxes to slow a surge in property prices and investment.

"Traditionally, developers have relied on bank loans," said Jason Yang, a senior manager at the professional services department of property agency Colliers International in Beijing.

"They are now either launching public share sales or real estate trust offerings to cope with the funding crunch as a result of the tightening measures."

Chinese developers aren't allowed to use bank loans to buy land sites, said Wayne Zane, a director of research at Colliers in Shanghai. The government in 2004 raised the amount of cash developers have to come up with on their own to 35 percent of total development costs from 20 percent.

SOHO China in 2002 delayed a US$250 million IPO in Hong Kong and the US because of disagreement between arranger Goldman Sachs and other advisers involved in the sale over its profit outlook, bankers involved said at the time.

The company in January 2003 scrapped the sale, citing unfavorable market conditions in a filing with the US Securities and Exchange Commission. SOHO's Website contains no information on its earnings.

SOHO was co-founded by former oil ministry employee Pan Shiyi and his wife, former Goldman Sachs analyst Zhang Xin, in 1995. The couple ranked 237th on Forbes magazine's list of Chinese mainland's 400 richest people last year.

Beijing's average real estate prices increased 16.7 percent to 8,792 yuan (US$1,128) per square meter last year, Xinhua news agency reported on Jan. 8, citing a report released during an industry conference.

As much as 200.1 billion yuan worth of apartments, houses, office buildings and shops were sold in the Chinese capital last year, Xinhua said without giving a comparative figure for 2005.

SOHO China has focused on buying sites in the Central Business District in eastern Beijing, where it built residential and office properties under the SOHO brand, catering to the city's newly rich.

"It has shown a track record of acquiring prime sites," Yang of Colliers said. "Its property sales have been brisk."

The company has developed 1.58 million square meters of properties, about a fifth of the Central district's total area, according to its Web site. Projects include Jianwai SOHO, a residential and commercial complex opposite the China World Hotel.

Some Chinese property stocks traded in Hong Kong have rallied in the past year, triggering a rush to raise more money selling stock. Hopson Development Holdings Ltd. which invests in Chinese properties, saw its shares jump 132 percent in 2006. The company raised US$126 million in a Hong Kong stock sale in November.

Guangzhou R&F Properties Co Ltd, which raised US$208 million selling shares in September, soared 149 percent last year.