HONG KONG: Renhe Commercial, a Hong Kong-listed mall developer on the mainland, announced yesterday that it will purchase the operation rights of six shopping malls for a total 834 million yuan ($122 million).

The six underground shopping centers are located in Daqing and Harbin of Heilongjiang province, Weifang of Shandong province, and Dalian of Liaoning province.

The deal will add 226,422 square meters to its property portfolio.

Separately, the company is signing intentional agreements with other vendors to acquire four more sites covering 215,551 square meters, the company said in a statement.

In the meantime, the company said it was placing 3 billion shares with investors at HK$1.86 per share in a separate statement to the Hong Kong stock exchange.

The placement price represents a discount of about 8.8 percent to the stock's last closing price of HK$2.04, according to the statement.

The shares to be placed with not less than six professional, institutional and individual investors, represent about 15 percent of the company's issued share capital and 13.6 percent of its enlarged share capital, it said.

Proceeds from the subscription are estimated to reach HK$3.58 billion, which will be used to buy the operation rights at the underground shopping sites, the company said in the statement.

UBS Hong Kong is the sole book runner.

Shares of Renhe Commercial Holdings fell as much as 12 percent as trading resumed yesterday after the company said it was involved in a share sale. Its shares ended 7.84 percent lower at HK$1.88 yesterday.

A source with direct knowledge of the matter said the China arm of US venture capital giant Sequoia Capital retained its stake in Renhe and did not join the sale, according to Reuters.

Sequoia Capital China and Hong Kong's New World Strategic Investment said in early 2008 that they jointly invested 2.3 billion yuan in Renhe before the company went public.

The company went public in Hong Kong last October, the trough of the financial crisis. It raised $435 million, barely one third of the planned funds of $1.5 billion.

Renhe currently operates more than 330,000 square meters of underground shopping centers, located in Harbin, Guangzhou, Zhengzhou and Shenyang. The group plans to complete an additional seven projects by the end of 2009, which will increase its operational area to 770,000 square meters.

(HK Edition 07/17/2009 page3)