Four firms set to begin roadshows
New World hotel spin-off leads latest charge to tap market for funds as investor sentiment improves amid rebound in the US economy
At least four companies kicked off their pre-marketing campaigns yesterday to raise a combined US$1.3 billion through initial public offerings in Hong Kong, banking on rising investor confidence on the back of the US economic recovery.
NW Hotel Investments, a spin-off of New World Development, is looking to raise about US$700 million.
Its offering follows the hotel spin-off of Great Eagle's Langham Hospitality Investments last month.
NW Hotel is a business trust and should offer stable returns to yield-hungry investors as it plans to pay out its entire distributable income from the listing date to June next year and no less than 90 per cent in June 2015.
Bankers declined to offer expected valuations for the stock but the implied yield for the first year could be about 6.5 per cent - a level similar to what Langham, which operates three luxury hotels in Kowloon, pitched to investors.
NW Hotel's portfolio includes Renaissance Harbour View and Grand Hyatt in Wan Chai, and Hyatt Regency in Tsim Sha Tsui.
"Sentiment across regional markets has been lifted by better job numbers from the US," said a hedge fund manager who runs a US$1 billion portfolio.
Japan's stock market rose 4.9 per cent yesterday, making it the biggest single-day gain in almost five years. The Hang Seng Index rose 0.18 per cent.
"We don't believe the punchbowl of [quantitative easing] will be taken away in 2013 … expect investors to become less sanguine over the Fed's policy going into the new year," analysts at Jefferies said in a note.
The final pricing for NW Hotel shares is due on July 2 while trading is scheduled to begin on July 7.
Joining the latest listing rush, Nexteer Automotive, a Michigan-based steering and drive line systems producer that was bought out by Pacific Century Motors in 2010, said it was preparing to raise US$400 million by selling 30 per cent of its enlarged share capital.
The company will kick off its roadshow on Friday.
Pricing of the shares is scheduled for June 26, and their first day of trading is July 3.
Meanwhile, Malaysian iron ore producer CAA Resources and Freetech Road Recycling Technology, a provider of asphalt pavement maintenance services on the mainland, are seeking to raise US$77 million and US$111 million, respectively.
CAA has three cornerstone investors who have pledged to subscribe to US$26 million worth of shares, or a third of the public offering.
The company will sell 431 million shares. The price range is between HK$1.30 and HK$1.60.
Freetech has set a price range for its shares at between HK$2.43 and HK$3.32. It has secured US$6.4 million in key investor commitment.