Yunnan firms on course for listing
Steelmaker Kunming Iron will float in the second half while medicine firm Yunnan Yunyao will go public next year
The Yunnan provincial government will press ahead with its planned main-board listing of two major enterprises and is seeking to raise as much as $2.8 billion despite the mainland's macroeconomic measures, according to a senior official.
Long Jiang, the deputy director of the State-owned Asset Supervision and Administration Commission, said Kunming Iron and Steel (Group) aimed at going public in the second half of this year, while Yunnan Yunyao Group would list next year.
Kunming Iron, the province's largest steel producer, planned to raise up to $2 billion in its initial public offering, which was being handled by sponsor Core Pacific-Yamaichi, sources said.
Yunnan Yunyao was undergoing a complicated restructuring ahead of its listing, in which the group hoped to raise as much as $800 million, they said.
The company is the parent of A share Yunnan Baiyao Group, which makes the popular Yunnan Baiyao medicine, used to control excessive bleeding.
A consortium led by Hong Kong conglomerate New World Development said it had signed a letter of intent giving it the right to acquire a 10 per cent stake in the restructured Yunnan Yunyao company, with a net asset base of close to one billion yuan.
At present, Yunnan Yunyao is 52 per cent owned by the Yunnan Medicine Group, 29 per cent by China Resources Holding - the unlisted parent of red chip China Resources Enterprises - 11 per cent by Yunnan Hongta Investment and 8 per cent by Yunnan International Trust and Investment Corp.
Mr Long, the former chief of Yunnan Yunyao, said the company's restructuring would be completed this year. 'We understand that the central government has revealed some measures to slow down investment in fixed assets, which have no impact on the fund-raising plans,' he said.
With a 43 per cent surge in fixed-asset investments in the first quarter of this year, China has banned blind investments and loose bank financing in heavy industries such as cement, steel and aluminium in an attempt to put the brakes on rapid economic growth.
Despite the measures to cool the economy, Kunming Iron needed fresh funds to expand its production capacity to meet rising demand in fast-growing western China, Mr Long said.
'The steel prices may have come down as a result of the central government policy in the short term, but there is genuine demand growth for iron and steel in the western parts of China,' he said.
Kunming Iron planned to double its annual production capacity to about four million tonnes this year, he added. The capacity growth will catapult the firm into the province's top 30 medium-sized steelmakers.
Last year, Kunming Iron's net profit stood at about 500 million yuan, Mr Long said.
Kunming Iron, wholly owned by the Yunnan provincial government, was seeking to introduce strategic investors ahead of its listing, he said.
