PRINT THIS PAGE The IPO Show 17/10/2007. Source: Asia Private Equity Review (APER).
A number of debuts drew investors’ overwhelming response There has been no end to the Greater China initial public offering (‘IPO’) stampede. The month of September continued to register investors’ feverish responses to recent listings on both the Hong Kong and Shanghai bourses. On 20th September, Hidili Industry International Development Ltd. (‘Hidili’), an integrated coking coal company, became a quoted stock on the Hong Kong Stock Exchange (‘HKSE’). As an indication of investors’ keen interest to purchase Hidili’s shares, its IPO was oversubscribed by a staggering 670 times. Hidili offered 600 million shares at HK$6.83 (US$0.88) each. On its first day of trading, the coking coal company saw its share price surge by 77.4% to close at HK$12.12.
Earlier in the year, Hidili received a US$50 million capital injection from Baring Private Equity Asia. Prior to Hidili’s public listing, Baring Private Equity Asia converted its convertible notes into equity shares at a discount of 78.2% to 83.95% of the offer price. The private equity firm has been able to sell a portion of its holdings, and clocked a return of US$70 million to its coffers. Based on the Hidili’s offer price, Baring Private Equity Asia’s residual holdings would command a book value of US$192.6 million.
Another China play that gave its investors cause for celebration has been Sino-Ocean Land Holdings Ltd., (‘Sino-Ocean’), one of the largest real estate companies in Beijing. The thirdlargest public offering on HKSE, as Sino-Ocean raised HK$11.94 billion, the property company’s IPO recorded an oversubscription of 206 times.
In the second half of 2006, Sino- Ocean received an aggregate US$146.9 million from a host of foreign financial investors. Standard Chartered Private Equity committed US$35 million, while Morgan Stanley, Merrill Lynch and Credit Suisse,through their respective real estate investment vehicles, accounted for the residual.
Sino-Ocean offered its shares at HK$7.7 each. On its first day of trading, its shares closed at HK$11, a 43% rise. Unlike the Hidili case, all its investors had undertaken not to dispose of their holdings. However, in terms of book value these investors have made a 4.27 times gain of their invested capital.
As China’s A-share market shows no sign of any adjustment, the recent listing of Bank of Beijing, backed by International Finance Corp. (‘IFC’), further fuelled the IPO momentum in the Greater China stock markets.
On 19th September, Bank of Beijing, China’s largest city-level GREATER CHINA CORNER - DIVESTMENTS commercial bank, joined its peer, Bank of Nanjing, to become a quoted stock on the Shanghai Stock Exchange. It offered its shares at 12.5 yuan (US$1.56) each, 50 cents higher than the proposed maximum offer price. On its first day of trading, Bank of Beijing’s share prices closed at 22.68 yuan, 81% higher than the offered price. It raised 15 billion yuan through this public offering.
In April 2005, the IFC committed 479 million yuan to Bank of Beijing and took up a 5% stake. The private sector investment arm of the World Bank, along with other foreign major shareholders, have agreed to hold their shares in the lender for at least three years after Bank of Beijing’s public offering (fig. 25).
Asia Private Equity Review (APER) is the foremost voice on matters related to private equity/venture capital in the region. Well-recognised as being the singular source for accurate and timely news, in-depth analysis and global perspectives, APER is published by the Hong Kong-based Centre for Asia Private Equity Research. For further information please visit their website at www.asiape.com or email them at info@asiape.com
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