A large proportion of the proceeds from Semiconductor Manufacturing International Corp's (SMIC) initial public offering will go to institutional shareholders and directors, despite the firm's massive capital expenditure requirements.
Institutional shareholders such as Motorola and Goldman Sachs will pocket up to HK$6 billion from the chipmaker's dual listings in Hong Kong and New York.
But while insiders and substantial shareholders are planning to unload during the IPO, SMIC will probably return to the market later and ask investors to buy more shares.
The mainland's largest contract chipmaker needs US$3.32 billion over the next two years to pay for capacity expansion and proceeds from the offer will not be enough.
In all, 4.54 billion shares will be sold in the issue at a price range of HK$2.41 to $2.72 each, providing as much as $12.34 billion.
Should sponsors exercise a green-shoe option to meet strong demand, an additional 681.81 million shares would be sold, with all the extra money going to shareholders and directors instead of to the company.
