China diversified clean-energy firm Huadian Fuxin Energy Corp has cut the size of its planned Hong Kong initial public offering by nearly two-thirds to $340 million, underscoring a weak global economic environment and tepid demand for new listings.
Choppy stock markets have resulted in Asians IPOs worth nearly $8 billion being pulled this year, including the $1 billion Hong Kong listing of high-end jeweller Graff Diamonds late last month.
Huadian Fuxin plans to raise up to $340 million from its IPO, according to a term sheet seen by Reuters on Monday, which if completed would be among Asia’s bigger new listings so far this year. It was previously aiming to raise about $940 million.
British retailer Tesco plc’s (TSCO.L) $600 million IPO of its Thailand unit property fund is the biggest Asian IPO this year, followed by the $580 million offering of oil explorer Sunshine Oilsands Ltd (2012.HK) in Hong Kong and the $500 million listing of Philippine banking group GT Capital Holdings Inc (GTCAP.PS).
The smaller-sized IPOs in 2012 underscore the difficulty bankers and companies have had in convincing investors to buy into equity markets.
Huadian Fuxin, which is 85.8 percent owned by state-owned power utility China Huadian Corp, has set a HK$1.60-1.76 per share price range for the offer, the term sheet showed.
The company will offer 1.5 billion new shares in the base deal, with another 225 million in the over-allotment option that could lift the IPO size to $391 million.
Six cornerstone investors agreed to buy $208.8 million worth of Huadian Fuxin shares as part of the IPO, Thomson Reuters publication IFR reported. The commitments helped to cover 61 percent of the base deal, easing concerns about demand for the offering amid the downturn in global equities.
Sinovel Wind Group (601558.SS), which supplied engines for more than one-third of Huadian Fuxin’s wind power capacity, pledged $58.8 million for the IPO.
CSR Zhuzhou Electric Locomotive had commitments worth $50 million of shares, while Huaneng Renewables (0958.HK), State Grid International and Shanxi Lu An Mining each agreed to invest $30 million in the offering and general Electric (GE.N) unit GE Pacific $10 million, IFR added.
TUMBLING DEAL VOLUMES
Huadian Fuxin will use 30 percent of the proceeds to buy wind turbines, gas turbines and other equipment, and 20 percent to repay short-term borrowings, the terms showed.
Hong Kong’s IPOs have had their slowest start in about four years with deal volumes down 85 percent in the first five months of the year. Just last week, Chinese coal producer Inner Mongolia Yitai Coal (900948.SS) decided not to start bookbuilding for its Hong Kong initial public offering.
Still, several multi billion dollar offers from Asian companies are set to be launched later this year, including the $3.3 billion listing of Malaysian palm oil giant Felda Global.
Huadian Fuxin Energy Corp is a diversified clean energy company engaged in the development and operation of hydro power projects and coal-fired power plants in Fujian province and wind power and other clean energy projects throughout China.
The deal is set to be priced on June 20 and listing is scheduled for June 28, the term sheet showed.
Bank of America/Merrill Lynch, CITIC Securities (600030.SS) (6030.HK) and UBS (UBSN.VX) were hired as joint global coordinators for Huadian’s offer. -By Denny Thomas and Elzio Barreto
Category: Hong Kong