CAA joins ranks of market casualties
Mainland-owned iron ore miner shelves plans for share offering, citing poor trading conditions that have prompted other candidates to pull out
CAA Resources, an iron ore miner in Malaysia controlled by a mainland businessman, has become the latest company to postpone its initial public offering in Hong Kong amid "adverse market conditions", two people with direct knowledge of the deal say.
The company was looking to raise HK$691 million after securing three cornerstone investors who pledged to commit US$26 million, or 30 per cent of the entire deal.
According to a person involved in CAA's listing, there was no cornerstone pullback but the general demand for the new shares fell below expectations after the Hang Seng Index yesterday dropped 2.19 per cent and Japan's Nikkei-225 Index fell 6.35 per cent on concerns over exporters' profits.
Two newly listed companies - luxury car dealer China Harmony Auto and property developer Wuzhou International - made mixed trading debuts.
Harmony Auto's shares fell 16.12 per cent below their offer price yesterday, while shares in Wuzhou rose 5.74 per cent to close at HK$1.29.
But for market debutants that have struggled, brokers say overly aggressive pricing could be a factor, making these stocks attractive to short sellers during a market downturn.
Elsewhere, Sze Wai-pan, the chief executive of Freetech Road Recycling Technology, a provider of asphalt pavement maintenance services on the mainland, said the company was confident about its prospects despite the volatile market conditions.
If Freetech fails to list by August 15, the private equity arms of Citic Securities and CICC will sell preferred shares back to Freetech at an expected annual return of 12 per cent on their investments for a two-year period from August 16, 2011.
Freetech is preparing to raise up to US$111 million in its Hong Kong initial public offering and bankers says it is too early to gauge whether the order book for the deal is covered.
Hopewell Hong Kong Properties, a spin-off of conglomerate Hopewell Holdings, on Wednesday delayed its HK$5 billion initial public offering as market sentiment sours.
However, braving the market is Nexteer Automotive, a Michigan-based steering and drive line systems producer, that launches its roadshow today in a bid to raise US$400 million by selling 30 per cent of its enlarged share capital.
Hopewell's deferral of its share sale follows a decision by parts supplier Mando China, the first South Korean firm to seek a Hong Kong listing, to pull a US$200 million deal last month, citing "adverse market conditions".
In March, the South China Morning Post reported that Triplex Biosciences, a biotechnology and medical firm, called off its listing plan after a short-lived pre-marketing campaign.
The Xiamen-based drug maker was looking to raise about US$150 million through a Hong Kong listing. The company may resume its listing plan next month if demand recovers.