Shanshui Cement raises HK$1.8b on low pricing
China Shanshui Cement Group, the largest maker of the building material in Shandong province, raised HK$1.82 billion from its initial public offering after pricing the deal near the bottom of the indicative valuation range amid a tough capital market environment, sources said.
The listing hopeful sold 650 million new shares at HK$2.80 each, from an indicative range of between HK$2.70 and HK$3.65 per share, a source said.
'We could've priced the shares anywhere around the mid-range, but the company is cautious about the poor performance of new offerings and hopes to leave some room [for investors to gain],' the source said.
Funds with only long positions on stocks were the biggest buyers of Shanshui's offering as they were upbeat about the company's fundamentals and long-term prospects, another source said.
Shanshui is expected to benefit from strong demand for cement products as the mainland has several large-scale infrastructure projects planned for the next few years.
The institutional tranche, which represents 90 per cent of the offering, was three times covered while retail orders were about double the number of shares available to that portion, market sources said.
Morgan Stanley and Credit Suisse were joint underwriters on the transaction.
'Investors have become more conservative since the beginning of the year and are not willing to buy new names. I think they will adopt a more defensive strategy in the coming months,' said an investment banker.