Scandal-hit Tianhe set to raise US$1b in Hong Kong listing

PUBLISHED : Saturday, 22 March, 2014, 1:30am
UPDATED : Saturday, 22 March, 2014, 4:57am

Tianhe Chemicals is on track to raise about US$1 billion in a Hong Kong initial public offering in May, after JP Morgan quit working on the listing amid a US investigation into its hiring practices, two people familiar with the deal said.

"The overall listing process has not been affected by JP Morgan's decision to drop its role in advising on Tianhe's IPO," one banker said. "The tentative schedule suggests a May listing if everything goes smoothly."

The Liaoning-based firm recently submitted the A1 filing to the Hong Kong stock exchange, and key managers for the deal are waiting for feedback from Hong Kong Exchanges and Clearing, said the two sources, who work for different banks.

The spotlight was thrown on the listing of Tianhe Chemicals when US banking giant JP Morgan gave up the mandate after questions arose about its association with Joyce Wei, a former employee of the US bank who is the daughter of Tianhe Chemicals chairman Qi Wei.

Wei resigned from JP Morgan in November and joined UBS, which has won a senior role in the deal.

Qi is well connected in Liaoning, where his company is seen as one of the province's leading businesses. Tianhe Chemicals' partners include major state-owned oil firms such as Sinopec and PetroChina, giving him enormous political clout.

Bank of America Merrill Lynch, Morgan Stanley and UBS are the lead managers for the deal.

A spokeswoman for Tianhe Chemicals declined to comment on the listing process.

Separately, Galaxycore, a Shanghai-based semiconductor design firm that specialises in image sensors, is planning to raise about US$200 million in the second quarter of the year through a Hong Kong listing.

The firm had filed an A1 application to the stock exchange and answered questions from regulators, people familiar with the deal said.

"The deal should capture ample investor interest since it has a dominant position," a banker said.

Established in 2003, the firm makes integrated circuits for smartphones, personal computers and other electronic gadgets.

Galaxycore says on its website that it raised an undisclosed amount of funds from venture capital firms Walden International and Sequoia Capital, the Silicon Valley-based investment firm that was an early investor in Google, PayPal and LinkedIn.

Bank of America Merrill Lynch and Morgan Stanley are the lead managers for the deal.

Meanwhile, Koradior, a Shenzhen-based designer of women's clothing, is looking to raise US$100 million in the third quarter of the year. It has yet to file any documents with HKEx.

Haitong Securities and CIMB are the lead managers for the deal.