Quick Take: Property Developer R&F Suspends Shanghai Listing Project

Hong Kong-listed developer Guangzhou R&F Properties Co. Ltd. has frozen its application for an A-share initial public offering on the Shanghai Stock Exchange amid scrutiny of its financial status.

The application is slated to be reactivated following the appointment of a new representative for one of its fundraising project sponsors, according to an R&F filing with the Hong Kong Stock Exchange. A date for the appointment was not announced.

The company asked the China Securities Regulatory Commission (CSRC) to suspend the listing application process after the sponsor's former representative resigned.

The suspension is set against the backdrop of R&F’s sudden and unexpected involvement in a closely watched transaction between property companies Dalian Wanda Group and Sunac China Holdings. In what's been described as a hastily arranged agreement, R&F agreed in July to pay Wanda 19.9 billion yuan ($3 billion) for 77 hotels.

The deal reportedly added pressure to R&F's liquidity status and came as Sunac agreed to buy Wanda's theme parks for more than 63 billion yuan ($9.3 billion) in China's largest property deal ever.

R&F initially applied for a Shanghai market IPO in 2015 in hopes of raising about 35 billion yuan. But CSRC's processing of the application moved slowly.

Before the latest, self-imposed suspension, the developer was No. 61 on a list of pending IPOs, according to a CSRC document Sept. 21.

Securities brokers told Caixin, meanwhile, that CSRC recently stopped processing new applications for stock exchange listings filed by property developers in a move designed to slow the funding tap for property developers and thus tighten housing price controls.

After buying the hotels, the credit rating agency Fitch Ratings assigned R&F to its negative watch list, citing the firm's rising debt levels. And Moody’s Investor Services in a Sept. 11 report raised a red flag over R&F’s liquidity condition.

R&F reported an 8.8% decline in revenues to 20.41 billion yuan for the first six months of this year. As of June 30, its cash reserves stood at 32.4 billion yuan.

Contact reporter Leng Cheng (chengleng@caixin.com)