Exclusive | AAG Energy mulls reviving IPO in HK

AAG Energy, which extracts natural gas trapped in coal seams in Shanxi province, may revive its Hong Kong initial public offering plan that was shelved a year ago, its chairman says.

"Our IPO plan is not just for the money, we are not short of cash," Stephen Zou Xiangdong told the . "A stock market listing is better than a private share sale as it would give us a better valuation and our initial shareholders more flexibility on their investment."

The company may sell more shares to help fund its operations for this year and next of US$200 million to US$300 million.

US private equity firm Warburg Pincus owns about 30 per cent of AAG, while Baring Private Equity has 25 per cent and Ping An Asset Management 12 per cent. The rest is held by its management and other investors.

In 2012, AAG sought to launch a US$200 million share offering but scrapped the plan sponsored by Barclays and JP Morgan as investors would not give it a high enough valuation.

AAG last year raised US$124 million from private investors and obtained in January a US$100 million loan from HSBC and Standard Chartered.

Zou said with the increased production of its first project, the company's cash flow was enough to meet the investment needs of its two projects, although additional funding would allow it to start exploration work in three projects in Inner Mongolia and consider acquisitions.