Mainland aluminium producer China Zhongwang Holdings has instructed accounting firm Ernst & Young to independently review its initial public offering prospectus following allegations that the firm falsified information about its customer base in the share-offer document.
Zhongwang raised HK$9.8 billion in its May flotation, becoming the first company to obtain over US$1 billion from investors on any global stock market for nine months. The fund-raising propelled Liu Zhongtian , the Liaoning - based firm's founder and chairman, to 10th place on the Hurun rich list, which estimated his personal wealth at 28 billion yuan (HK$31.8 billion).
But on September 14, the mainland newspaper China Economic Observer claimed to have found that some customers named in Zhongwang's IPO prospectus did not buy from the company last year.
UBS, the lead banking adviser on Zhongwang's IPO, convinced the company to order the internal probe, two people close to the company with knowledge of the situation said.
The Observer retracted its story, but investors remained concerned. Last week, a research analyst at stockbroker Cazenove attempted to tackle the newspaper's claims by interviewing Zhongwang's top customers.
On October 27, Cazenove analyst Ole Hui wrote in a note: 'At best, the [interview] results are inconclusive.'
One of the customers, Xian Feibao Airport Equipment, told Cazenove it mainly used steel. Zhongwang, which said in its prospectus that Feibao was a 'major customer', does not say it makes steel products.
