Four firms begin pre-marketing of IPOs
Four companies started pre-marketing yesterday of their Hong Kong initial public offerings, deals that could raise as much as HK$32 billion.
The shares sales of Metallurgical Corp of China, Sinopharm, China South City Holdings and China Resources Cement add momentum to the city's most active offerings calendar in the last 14 months.
Behind them is a queue of 10 candidates for initial share sales in the next two months.
Mainland contractor Metallurgical Corp will have the biggest issuance among the four proposed offerings and could raise HK$18 billion by selling 2.87 billion shares in Hong Kong, according to a sales document.
Of the shares offered, 90.9 per cent will be new H shares, while the rest will be sold by state-owned National Social Security Fund. Together with a share sale in Shanghai, it will represent 18.3 per cent of the firm's outstanding share capital.
Given the offering's size, the company has granted a waiver to allocate only 5 per cent share of the total offering to local investors, instead of the usual 10 per cent.
The listing candidate is scheduled to meet international investors from today and will kick off a management roadshow on September 7. The public offering will start on September 11. Final pricing is set to be fixed on September 17. Formal trading of the shares is slated for September 24.
Citi, China International Capital Corp, Citic Securities and Morgan Stanley are the joint bookrunners of the offering.
CICC and Morgan Stanley, along with UBS, are also helping Sinopharm, the largest pharmaceutical and health product distributor on the mainland, to tap the Hong Kong market for HK$7 billion to fund expansion of its distribution network.
According to a report by CICC, the deal's arranger, Sinopharm will be able to increase net profit 45 per cent to 850 million yuan this year from 586 million yuan last year, on higher sales volume and margin enhancement.
The firm, owned by China National Pharmaceutical Group Corp and Fosun Pharmaceutical, is involved in drug retail sales and the manufacturing of medical products as well as the distribution of pharmaceutical and health products.
Sales increased by 61 per cent to 38.2 billion yuan last year, of which 94 per cent was derived from medicine distribution.
Logistics trade operator China South City Holdings and China Resources Cement also launched their respective HK$4 billion and HK$3 billion Hong Kong initial offerings yesterday.
One market source said China South City is expected to sell shares at a discount of about 40 per cent to 45 per cent to its net asset value, slightly less than other mainland developers.
The company will use the proceeds to fund development of a new project in Shenzhen that could help it boost total gross floor area to 2.6 million square metres from its existing 463,000 sq metres, according to a report from BOC International. The mainland investment bank is working on China South City's Hong Kong offering.
