Towngas China to tap into renewed share market heat

Gas company seeks pipeline of US$122m in fresh capital from share placement for acquisitions

PUBLISHED : Thursday, 10 January, 2013, 12:00am
UPDATED : Thursday, 10 January, 2013, 4:21am

Towngas China, a mainland unit of Hong Kong and China Gas, is planning to raise US$122 million in a share placement as investors continue to push Hong Kong stocks higher in the first few sessions of 2013.

According to a term sheet obtained by the South China Morning Post, Towngas China, which is involved in sales and distribution of piped gas on the mainland, is offering 150 million new shares and has set at an indicative price range between HK$6.24 and HK$6.31 per share, a discount of 6.9 to 8 per cent before the midday closing price of HK$6.78 yesterday.

Towngas China, controlled by Hong Kong billionaire Lee Shau-kee, plans to use the fresh capital for acquisitions and to replenish its working capital.

Buyers of the shares will face a 90-day lock-up period. Trading in its shares was halted at noon yesterday.

Sources familiar with the deal said the share placement was fully covered and most of the shares were allocated to a mix of long-only and hedge funds.

Following a disappointing performance in Hong Kong's initial public offering market last year, most investment bankers have forecast companies will continue to raise capital through privately negotiated block trades or club-style deals.

HSBC and UBS are the joint bookrunners for the transaction.

Joining the latest fund-raising rush, Speedy Global, a supply chain manager specialising in the apparel and garment industry, has raised HK$123 million through an initial public offering in Hong Kong after the company priced its shares at the top-end of the offer range. Golden Wheel Tiandi, a Nanjing-based property developer, is also set to raise as much as HK$890 million through a Hong Kong listing.

As the markets begin to reheat, there are a number of IPO hopefuls looking into the capital markets, including two spin-off listings from large state-owned enterprises - the country's biggest oil refiner, Sinopec, and Aluminum Corporation of China, also known as Chalco.

Sinopec Engineering, the oil-refining and petrochemical unit of Sinopec, has proposed raising US$1.5 billion, while Chinalco Mining, a Chalco copper division, plans to kick off one week of premarketing today in a bid to raise US$300 to US$400 million.

Elsewhere, market participants said Kweichow Moutai, a state-owned Chinese liquor maker, might spin off its Xi Jiu brand for a H-share listing but the company has not offered any timetable. Xi Jiu shares the last name of Xi Jinping, the new Communist Party chief who took over from Hu Jintao in November.