20 firms line up for year-end IPO rush

Cinda and Qinhuangdao Port are among listing hopefuls seeking a combined HK$30 billion as sentiment improves before key party meeting

PUBLISHED : Wednesday, 06 November, 2013, 4:54am
UPDATED : Wednesday, 06 November, 2013, 4:54am

Hong Kong's listing market is on course for another year-end rush, with about 20 companies planning to launch share offerings.

The listing hopefuls aim to raise at least HK$30 billion in total, including Cinda Asset Management's US$2.5 billion offer and Qinhuangdao Port's US$500 million plan. This will bring the amount of capital raised for the full year to about HK$100 billion.

Cinda, one of the mainland's four non-performing asset managers, is expected to undergo a listing hearing with the Hong Kong stock exchange tomorrow. Its long-planned share sale is being marketed as an investment story for "counter-cyclicals in the midst of the economic slowdown".

The city's equity capital market has steadily recovered from a hiccup in late June as investors switched into risky assets such as equities and derivatives at the expense of traditional fixed-income products. That has been given an impetus by the United States Federal Reserve's decision to keep its cheap-money policy in place and continue to fuel its US$85 billion monthly bond-buying programme.

Meanwhile, the third plenum of the Communist Party's Central Committee is expected to set the tone for a string of reforms that could buoy the market.

The four-day session is being billed as important as the one in December 1978 that marked the start of market-oriented reforms under Deng Xiaoping.

"Expectations for a comprehensive policy agenda in the plenary session have laid the ground for relatively buoyant sentiment over new shares," said Edward Au, a partner at Deloitte.

He projected Hong Kong would move up a spot to third in this year's global league table for initial public offerings.

Ted Osborn, a Hong Kong-based partner at PricewaterhouseCoopers specialising in bad debt, sounded a note of caution yesterday, saying Beijing was likely to bring in outsiders, including foreign investors, to resolve the mounting debt situation at local governments.

Osborn said one emerging problem was that some loans given to middle-ranking officials were being "overvalued", generating unmanageable risks to smaller city commercial lenders.

Raymond Yeung, a senior economist at ANZ Banking, concurred with Osborn, saying China faced liquidity and maturity mismatch risks rather than an insolvency issue.

  • Shuanghui International is to follow up its record-breaking acquisition of US pork producer Smithfield Foods with a US$5 billion flotation of the combined company in Hong Kong next year. According to two sources with direct knowledge of the matter, Shuanghui had recently mandated six banks as sponsors for the IPO, including BOC International, Citic Securities International, Goldman Sachs and Morgan Stanley.

Additional reporting by Reuters