CNBM placement seeks HK$2.7b to take over rival cement makers

China National Building Material (CNBM) and one of its major shareholders are placing HK$2.73 billion worth of shares following the company's announcement of an expansion plan last week.

The mainland's second-largest cement producer and shareholder National Social Security Fund - the country's largest pension manager - are placing a total of 149.7 million H shares at between HK$17.80 and 18.25 each, a sales document sent to fund managers shows.

The company itself is offering 136.7 million new shares to raise as much as HK$2.5 billion. The price range represents up to a 9.83 per cent discount to the stock's last price of HK$19.74 before trading suspension yesterday.

This is the first large-scale share placement in Hong Kong after the recent market slump. On Monday, the Hang Seng Index dropped below the 22,000-point level, 6.54 per cent off the peak of 23,472.88 on July 24.

Some investors said the deal in which Morgan Stanley acted as bookrunner might not be that well received because of the volatile market.

''Investors are usually cautious in buying shares from placements amid high market volatility; they would like to keep more cash,'' said a fund manager who was invited to take up some shares.

Encouraged by the government's policy to consolidate the fragmented market, CNBM has been active in making acquisitions over the past few months.