Huiyuan Juice seen pricing IPO at top

PUBLISHED : Wednesday, 14 February, 2007, 12:00am
UPDATED : Wednesday, 14 February, 2007, 12:00am

China Huiyuan Juice Group, which is seeking to raise as much as HK$2.4 billion through an initial public offering, will respond to strong demand by pricing its shares at HK$6, the top of the indicative price range, a source said.

The retail portion of Huiyuan Juice's share offering was at least 800 times oversubscribed, making it the hottest Hong Kong offering so far this year, the source added.

'The offering is probably set to reach around 1,000 times after counting all orders including those from electronic applications,' the source said.

The strong response, which has tied up HK$192 billion in funds, will probably result in the shares available for retail investors being increased to 200 million from the original 20 million, according to the listing document.

The international tranche was about 100 times covered with investors still heavily betting on a mainland consumer sector that is benefiting from the country's thriving economy.

'Institutional investors placed the orders with no price sensitivity,' said a source close to the arranger.

UBS is the sole bookrunner of the offering. Trading is expected to begin on February 23.

Some market watchers expressed caution on the offering of 400 million shares because of the uncertainty with the 2.24 per cent drop in the Hang Seng Index yesterday, the benchmark's sharpest fall since November last year.

'Shares of Huiyuan Juice will fall on their listing debut next week if market sentiment continues to be weak after today's market slump,' said Ricky Tam, a director at Champlus Asset Management. 'Last year, prices of IPOs remained firm despite the market fall. But this time, Huiyuan may fall as there are signs that money is flowing out.'

The response towards Huiyuan Juice, the mainland's largest maker of pure juice, was strong because other share offerings competing for investor funds during the same period were not attractive and investors were prone to buy into new share issues when the market had risen too much, Mr Tam said.

Investors had given shares offered by China Properties Group and Hong Long Holdings a lukewarm response, sources said.

Hong Long, a small Shenzhen-based property developer seeking a main-board listing, received orders for almost 200 times more shares than were available for retail investors, sources said.

China Everbright Capital sponsored the share offering.