Brilliance upbeat despite SAR setback
Mainland-backed Brilliance China Automotive Holding is putting on a brave face despite a poor response to its equity offering in Hong Kong.
The underwriters managed to sell only 6.4 per cent of 2.175 million shares in the company's Hong Kong tranche.
The company and its lead underwriter, CLSA Global Emerging Markets blamed adverse market conditions for the selling of only 87.4 per cent of a total offering aimed at raising $642.27 million before expenses.
According to the underwriting agreement, a syndicate led by CLSA will have to fork out about $80.93 million to take up the unsold shares.
Yang Rong, chairman of the New York-listed Brilliance China Automotive, said the subscription level achieved was satisfactory, given the prevailing market conditions.
The underwriters sold 96.4 per cent of 19.575 million shares for international placement at $29.53 per share.
The lacklustre response to Brilliance China's share offer has come in the wake of last Friday's decision to postpone a listing by CNOOC, a unit of the mainland's largest offshore oil producer.
CLSA managing director Michael McCoy said yesterday the underwriting syndicate, which also included BOCI Asia and China International Capital was keen to proceed with the equity offering.
'This is a company which has shown over time that it is very well managed and can deliver impressive results, ' he said.
'We feel the pricing of the deal was fair and we are happy to support the equity offering as we feel that the undersubscription is not a reflection of the quality of the issuer, but rather of the difficult market conditions last week.' Mr Yang said the dual listing would enable the company to optimise the public equity markets in both New York and Hong Kong, where the company would also have a more visible corporate profile.
Mr McCoy said the company achieved a return on equity of more than over 25 per cent and profit growth of more than over 100 per cent on a compounded annual growth basis during the period from 1995 to 1998.