China truck maker seeks $7.8b from IPO
China National Heavy Duty Truck Group, the mainland's third-largest truck maker, planned to raise between $5.5 billion and $7.8 billion in an initial public offering in Hong Kong by the end of the year, market sources said.
United States investment bank JP Morgan was among the banks that had been hired to arrange the share sale, the sources said. The bank declined to comment.
'There's always demand for China IPOs, but I don't think it can duplicate the success of Dongfeng [Motor Group], whose shares rode the crest of the market rather than their own business,' said Francis Lun, a general manager at Fulbright Securities.
Shares of Dongfeng, the largest heavy truck maker in China, have doubled to $3.525 from its listing price of $1.60 in December last year. They trade at 13 times estimated earnings for next year.
The Hang Seng Index hit an almost six-year high of 17,301.79 points on May 8, rising 16.3 per cent from the start of the year. The index has since dropped on interest rate fears and closed at 15,804.81 yesterday.
Heavy Duty Truck severed ties with Weichai Power after Weichai found out it was buying engines from rival Hangzhou Motor Engine Factory. Weichai had been trying to buy Hangzhou Motor for two years but the plan was stalled by Heavy Duty Truck.
Shandong-based Heavy Duty Truck transferred its stake to the provincial government, which became the single largest shareholder in the Hong Kong-listed diesel engine maker with a 23.5 per cent stake, according to a stock exchange filing.
The company held 4 per cent of the mainland truck market last year with sales of US$150 million, according to its website. It signed an export contract valued at US$350 million with Iranian truck company Khodro Diesel in February, and plans to sell 10,000 trucks to the country this year.
Heavy Duty Truck operates a joint venture with Swedish vehicle maker Volvo. It has 500 dealerships and 800 service stations in China.
A Shenzhen-listed unit of Heavy Duty Truck, CNHTC Jina Truck, said in April it was seeking regulatory approval for a share placement to fund the purchase of assets worth 504 million yuan from its parent firm.