Government-backed Tradelink Electronic Commerce plans to raise up to $300 million by selling 233.3 million shares at $1.09 to $1.29 each. Seventy-five per cent of the shares come from the government, reducing its stake to 15 per cent from 42 per cent, while the rest are new. At the top end of the price range, the government will gain $225 million from the offering. Tradelink, the provider of an electronic platform for the handling of official trade-related documents in Hong Kong, and its sponsor DBS Asia Capital started the official marketing of the offer to institutional investors in Singapore yesterday. The trading debut is due on October 28. The retail offer - accounting for 10 per cent of the total - will kick off next Tuesday, meaning it will partially overlap with China Construction Bank's (CCB) mega-offering, which starts accepting retail subscriptions on Friday. Sources said Tradelink was not worried this would have an adverse impact on the demand for its shares. 'Compared with CCB, Tradelink is a tiny offering which targets different investors,' one said. Sources added Tradelink's up to 80 per cent dividend payout ratio and 6 per cent to 8 per cent yield had helped to stimulate investor interest and the initial response had been encouraging. But one fund manager said expectations that more and more cargo was originating directly from China rather than using Hong Kong as a transshipment harbour was likely to hit revenues and profits in the longer term. 'This is a yield play rather than a growth story but the attractiveness depends on how convinced you are that the earnings can be sustained. In two years, the yield could be a lot lower than today,' he said. According to a DBS Vickers report, Tradelink is likely to post a 36.5 per cent rise in net profit to $86 million this year and new shareholders will get a dividend for the last four months of the year. But turnover is expected to drop 10 per cent to $249.4 million. Apart from the government, Tradelink's existing shareholders from the local business community include PCCW, Swire Pacific and the Hong Kong General Chamber of Commerce. None of them will sell shares during the offering.
