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Eric Ng

Allan Zeman, known by many as Mr Lan Kwai Fong for his role in establishing the entertainment district, could personally raise as much as HK$591.15 million from the flotation of ColbyNet.

 ColbyNet was set up in February to control a global merchandise-sourcing group founded by Mr Zeman in 1975.

 The firm is expected to list on the main board on April 18.

 ColbyNet plans to raise up to HK$2.65 billion to help finance its bid to transform itself into an Internet business.

 It plans to spend about HK$155 million to build an Internet-based business-to-business sourcing platform, using e-commerce solutions provided by US-based Scient and Commerce One.

 If the company can sell 1.01 billion shares at the top end of the indicative price range of between HK$2.68 and HK$3.88, the flotation would give it a market capitalisation of HK$15.53 billion.

 At a price per share of HK$3.88, the company would be valued at a pro-forma fully diluted prospective price-earnings multiple of 121.

 However, to achieve the top end of the price range, analysts said ColbyNet would have to overcome a recent downturn in investment sentiment regarding Internet stocks.

 Delta Asia Financial senior research manager Ricky Tam Siu-hing said some investors had been switching their stock holdings from Internet stocks to traditional stocks amid the weak performance of the Nasdaq market in the past two weeks.

 'Even quality Internet plays such as iMerchant fell 30 per cent last Friday,' he said.

 'It's bound to have an effect on new Internet-related listings.'  ColbyNet will fix the final price of the share offer by next Tuesday with listing sponsor HSBC Investment Bank Asia, which has an over-allotment option of 152.35 million shares.

 Of the 1.01 billion shares to be offered to investors, 711.02 million are new shares. Chairman Mr Zeman, chief executive Philip Rockowitz and their families are to sell 304.72 million existing shares.

 Mr Zeman and his family could collect up to HK$591.15 million by selling 152.36 million existing shares.

 About 87.7 per cent of the shares will be sold to international investors and 10 per cent to local investors.

 Corporate investors, including Scient, will be offered shares worth about HK$63 million.

 Last month, ColbyNet acquired four property companies from firms controlled by Mr Zeman, Mr Rockowitz and their families, which recorded a combined net loss of HK$52.29 million last year.

 ColbyNet's net profit grew 24.1 per cent year on year to HK$70.48 million for the 12 months to December 31, as turnover rose 11.1 per cent to HK$3.26 billion.

 ColbyNet is forecast to make a net profit of not less than HK$130 million this year, of which about HK$31 million will be from interest income from the new share issue.

 About HK$700 million of the net proceeds will be used for investment in Internet-related firms considered complementary to the company's business strategy.

 Another HK$703 million will be used to acquire traditional retail companies which will be integrated into ColbyNet.



ColbyNet IPO 'worth $591m' to Zeman