Policy easing hopes spark listing rush in Hong Kong

Purifier maker Ozner Water leading at least 10 companies to launch share offerings after Beijing pledges measures to boost economy

PUBLISHED : Thursday, 05 June, 2014, 5:34am
UPDATED : Thursday, 05 June, 2014, 5:34am

At least 10 companies are gearing up to launch their initial public offerings this month after a pickup in investor sentiment amid expectations of a policy easing by Beijing to spur economic growth.

Investor confidence improved after the State Council said on Friday the authorities would help lower borrowing costs and speed up the credit application process to ward off the headwinds facing the economy.

Heading the listing queue is Ozner Water International Holding, a Shanghai-based maker of purification devices.

The company plans to raise up to HK$1.1 billion selling 422 million new shares for up to HK$2.70 each.

"Besides expanding our production and distribution capacity, we will boost the use of social media platforms including WeChat and WeiXin to market our brand," said Xiao Shu, the chairman of Ozner Water, yesterday.

The company has secured US$40 million, or about a third of the entire share offering, from United States hedge fund Och-Ziff Capital as a cornerstone investor.

Three private equity investors, including Goldman Sachs, have stakes in the company but none of them are selling their shares.

The stock is expected to start trading on June 17.

Xiao, one of the controlling shareholders of Ozner Water, said he was not looking to increase his stake by buying back shares from the private equity firms.

Meanwhile, Dynagreen Environmental Protection Group, a mainland water and sewage treatment company, has also kicked off its HK$1.1 billion flotation. It plans to sell 300 million new shares at a range of HK$3 to HK$3.70 each.

Hung Fook Tong, a maker of bottled herbal tea, is looking to list by the end of the month. It hopes to raise about HK$500 million to expand its retail network.

Bankers said the listing market would see some small deals, including those of mattress maker Sinomax Group and restaurant chain operator Tian Hing.

Also joining the listing race is Chanjet, a spin-off of Shanghai-listed Yonyou Software, which is looking to raise HK$1 billion by the end of the month.

If Hong Kong retail and Macau casino stocks once ruled the roost in the market, it is now shares of Hong Kong-listed mainland banks. They have jumped 17 per cent since the middle of March, indicating investor fears about government policy have eased.

"If the central government maintains its slight economic easing stance, we expect bank shares to appreciate another 10 to 15 per cent to [reach] 52-week highs," said James Antos, an analyst at Mizuho Securities.