SHANGHAI Petrochemical's $2.9 billion public offering is expected to elicit a better market response than the Tsingtao Brewery flotation due to its greater exposure to international investors, according to a company official.
Institutional investors, however, are likely to view the issue with caution, as the company is more complex than Tsingtao. Also, its prospectus lists a number of stern warnings ranging from China's lack of experience in minority shareholder protection topossible negative fallout from further economic and political reforms.
In addition, the prospectus points out that some of the company's major costs may rise substantially in the near future.
On the investors' part, there is concern that, despite the company's public listing, it will remain under the effective control of China's state government.
But the company official said Shanghai Petrochemical had become a shareholding company and, subsequently, did not belong to the state any more.
''We will treat the government like every other shareholder of the company,'' he said.
