(Yicai Global) Jan. 5 -- Beijing Lianjia Real Estate Agency Co., one of China's well-known estate agencies, is applying for non-public issuance of corporate bonds worth CNY6 billion (USD925.8 million), shows information released by the Shanghai Stock Exchange yesterday. The move comes at a time when China's regulatory tightening of the real estate market has started affecting market players.
Lianjia planned to go public in five years when it completed a financing round in 2016, offering investors the right to repurchase at any time. The large-scale bond issuance may be used to expand its assets to improve the market value to maintain the hope of listing, insiders commented.
As a non-listed company, Lianjia's financing channels are relatively limited. Since private bonds are issued to specific investors, its interest rate is much higher than the bank loans, said a securities analyst. Lianjia has no other choice except private bonds as its main financing channel for it cannot provide sufficient assets to the banks as pledge for credits, commented the analyst.
Lianjia was once the star company among real estate agencies in China. In 2016, its annual turnover exceeded CNY1 trillion with net profits of CNY1.36 billion. It raised CNY6 billion from big companies such as Tencent Holdings Ltd. and Baidu Inc.
However, under the strict macroeconomic regulation and control, the operating performance of Lianjia fell sharply. The volume of its core business -- housing transactions -- fell 60 percent in Shanghai in the first 11 months of 2017, while it dropped more than 70 percent in Beijing and Tianjin. Lianjia reportedly closed a large number of outlets and many of its employees have resigned or changed jobs.