The initial public offering (IPO) by Semiconductor Manufacturing International Corp (SMIC) was well received, with many brokerages fully exhausting margin lines yesterday, the first day the offer was open to retail investors. Tai Fook Securities said its margin lines were fully drawn. It did not disclose the amount but market watchers estimated Tai Fook had provided HK$1 billion to $1.5 billion in margin financing. DBS Vickers also said its margin lines of about HK$1.3 billion were fully drawn, while SHK Online, the internet arm of Sun Hung Kai Financial, said it had provided $2 billion. 'There was a lot of retail response to SMIC,' SHK Online chief executive Douglas Chen said. One fund manager said investors may have been drawn to the quality of the issue. SMIC, which makes chips on a contract basis, is the mainland's largest semiconductor manufacturer. But the issue looked expensive, he said, adding the offer valued SMIC at about two times book value and three times ex-cash book value. This compares with a price-book value of 2.43 times for Taiwan's United Microelectronics, the world's second-largest contract chipmaker. Meanwhile, SMIC has surprised the market with a plan to seek a bank loan of as much as US$600 million after the IPO, according to debt markets newsletter Basis Point. The money is needed to cover its US$3.32 billion capital expenditure over the next two years. On Sunday, chief financial officer Jenny Wang claimed the company was not pressed for funds, saying its IPO proceeds, cash from operations, existing loans and cash on hand would be enough. 'The loan transaction [so soon after the IPO] might change the projection and valuation provided in the company's prospectus,' the fund manager said.