Chinese Lessor, Milk Producer Aim for HK IPOs

28-Jun-2014 Intellasia | The Wall Street Journal | 6:00 AM Print This Post

China Aircraft Leasing Co. and China Shengmu Organic Milk Ltd began gauging investor interest for Hong Kong initial public offerings that could raise up to a combined $450 million this week, the latest in a number of Chinese companies tapping investors for funds in the city.

China Aircraft Leasing, the Hong Kong-based lessor partly owned by state-owned conglomerate China Everbright Group, began premarketing Monday and is planning to take investors’ orders for its $100 million-to-US$150 million deal Friday and list on the Hong Kong Stock Exchange on July 11, people with direct knowledge of the deal said.

Shengmu, an organic-milk producer based in Inner Mongolia, also began premarketing Monday. It is seeking to raise around $300 million in a Hong Kong IPO, but no date was currently available on when order-taking begins, other people familiar with the deal said. The dairy company, however, hopes to list in Hong Kong as early as July, the people said.

Meanwhile, a Chinese hotel operator whose assets include the Grand Hyatt Shanghai priced its IPO at the low end of an indicative range, other people familiar with the matter said.

Jinmao Investments & Jinmao (China) Investments Holdings Ltd raised $414 million in its debut in Hong Kong, after pricing its sale of 600 million share-stapled units at 5.35 Hong Kong dollars each, the low end of a range that went up to HK$5.65 a unit. The pricing of the deal represents a 9 percent yield, the people said. The company is set to list July 2.

The three companies are seeking to raise funds at a time that a flurry of Chinese companies, including a drug maker and a telecommunications chain store, are capitalising on recent gains in the city’s stock market. Hong Kong’s Hang Seng 0011.HK +0.24 percent Index is up 3.5 percent since May.

Conditions in Hong Kong’s IPO have improved since May, partly due to lower pricing. Of 11 IPOs that have taken place in the city since the start of last month, only three have fallen below their offering prices. Train maker China CNR Corp. 601299.SH +0.91 percent has slipped 1.7 percent from its float price, and port operator Qingdao Port International Co. 6198.HK -2.51 percent has declined by 2.4 percent since its debut. Automobile dealer Sunfonda Group Holdings Ltd 1771.HK +0.28 percent has fallen 0.3 percent since going public on May 15.

This is a marked improvement from the climate for offerings before Chinese pork producer WH Group Ltd pulled an initially planned $5.3 billion IPO in April, when many deals’ share prices slumped after listing.

Luye Pharma Group Ltd, partly owned by a group of private-equity firms, started taking orders from investors for its up to $764 million offering Monday, in the biggest of the Hong Kong IPOs launched in recent weeks. Beijing Digital Telecom Co., backed by private-equity firms CDH Investments and 3i Group, is seeking to raise up to $153 million before listing on the Hong Kong Stock Exchange on July 8, according to a term sheet seen by The Wall Street Journal on Wednesday.

China Aircraft Leasing said earlier it is planning to list in the city so it can buy more aircraft at a time when European banks are retreating from the business of leasing jets. Chinese aircraft-financing companies have been growing rapidly with rising demand for aircraft in China, even as the economy slows. These companies have taken on a bigger share of the market, as the traditional leading lenders of aircraft – European banks – pull back due to pressure to bolster their capital.

China International Capital Corp., CCB International and China Everbright Securities are the bankers on China Aircraft Leasing ‘s offering, while BOC International and Goldman Sachs Group Inc. GS -0.22 percent are handling Shengmu’s deal, the people said.


Category: Hong Kong

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