(Yicai Global) May 31 -- China Merchants Shekou Industrial Zone Holdings is set to become the first mainland-listed real estate company to issue new shares to raise funds in recent years as the related rules are relaxed.

The Shenzhen Stock Exchange has given the green light to CMSK's CNY17.4 billion (USD2.4 billion) private placement plan, the Shenzhen-based industrial park and residential property developer said in a statement yesterday. The leading investor will be China Merchants Investment Development, an investment arm of CMSK's majority shareholder China Merchants Group.

So far only a few Chinese property firms, and all of them listed in Hong Kong, have been given the green light to pursue private placements after the mainland securities regulator in November reopened the third financing channel for real estate companies in addition to bank loans and bonds. Since then, 37 firms have announced their plans to issue new equity, but most of them are still pending approval.

CMSK said that over CNY8.9 billion (USD1.3 billion) of the proceeds will be used to buy minority stakes in two industrial park developers controlled by China Merchants Group, and up to CNY4.3 billion will be spent on building 10 projects in six cities, including Shanghai. The remainder of about CNY4.2 billion will be used to replenish working capital and repay debt.

The deal still needs to be approved by the securities regulator but a source familiar with the matter told Yicai Global that the bourse's review is a key step in the process so after that the "review is generally completed."

The approval is a really positive signal to the property market and other qualified real estate enterprises to show that the government is serious about bailouts in the industry, Bai Wenxi, chief economist at Interpublic Group China, told Yicai Global. 

CMSK builds industrial parks and residential compounds and manages Shekou Cruise Terminal.

Editors: Tang Shihua, Emmi Laine, Xiao Yi