Tianhe Chemicals and Dynagreen seek almost US$1b in IPOs

Share offerings from Tianhe Chemicals and Dynagreen Environmental shift to retail buyers after discounts secure institutional tranches

PUBLISHED : Monday, 09 June, 2014, 3:29am
UPDATED : Monday, 09 June, 2014, 3:29am

Two listing candidates - Tianhe Chemicals and Dynagreen Environmental Protection - will take orders from retail investors from today, raising almost US$1 billion by floating their shares in Hong Kong.

The two deals were launched to the public after bankers on the respective initial public offerings said the international tranches of the share sales had been well received. They were covered after the issuers offered their shares at discounts.

The IPOs are being launched several weeks after WH Group called off its own offering in a tough market environment.

Liaoning-based Tianhe, in which Morgan Stanley invested US$300 million before the IPO, plans to raise US$818 million by selling 2.82 billion shares, of which 774 million shares are existing shares offered by the controlling shareholder Wei family.

Speaking from London yesterday, Tianhe chief executive Wei Xuan said the Wei family's decision to sell part of its holding in the offering would enable loan agreements with Bank of China International and ICBC International to be repaid.

The company has had financing with BOCI since 2010, including a revised warrant agreement in November last year. The company said the US$63.5 million in warrants should increase the valuation of the shares, the listing document states.

Separately, ICBCI, one of the eight bookrunners, lent out US$150 million with a maturity of 24 months in January. Under the share sale, the biggest part of the net IPO proceeds - about HK$1.54 billion - will be used to repay loans backed by Driven Global, a unit controlled by the Wei family that received 810 million yuan (HK$1.01 billion) in a special dividend in April.

Tianhe fell under the spotlight following an internal probe by UBS in relation to the hiring of Joyce Wei Xiao, daughter of the company's chairman who was tapped by the Swiss bank from JP Morgan last October. UBS is one of the three sponsors of the deal.

Joseph Lee, Tianhe chief financial officer and a former banker at Morgan Stanley, said its selection of underwriters and UBS's employment of the daughter of Tianhe chairman Wei Qi were not linked. Lee joined the firm in February after four years with the US investment bank.

The company will price the deal on Thursday, with the shares scheduled to start trading on June 20.

Separately, Dynagreen Environmental Protection, a mainland waste treatment and power generation company, also launched its flotation, seeking to raise HK$1.1 billion. It plans to sell 300 million new shares at a range of HK$3 to HK$3.70 each. It said three-quarters of the net proceeds, or HK$685.6 million, would be used to repay outstanding loans.

Dynagreen shares are due to begin trading on June 19.