Two Large State Firms to Test Hong Kong IPO Market

Topics: Stock market, Stock, Warrants issued in Hong Kong Stock Exchange Pages: 2 (521 words) Published: May 5, 2013
Two large state-owned enterprises are swooping on the Hong Kong market with their long-awaited IPOs almost simultaneously this week, and the prospect of two large offerings is likely to cast a pall over the city’s stock market.

The decisions by Sinopec Engineering and China Galaxy Securities to launch their roadshows separately came after the two large SOEs, tightly controlled by the Chinese government, both managed to secure strong support from some key cornerstone investors.

Sinopec Engineering, an engineering and construction unit of Sinopec, Asia’s largest oil refiner, plans to raise as much as US$2.24 billion (HK$17.38 billion) by offering 1.33 billion new shares, according to bankers working on the deal. The company is offering the share at an indicative price range of between HK$9.8 and 13.1 per share, translating into a price to book ratio of 1.2 to 1.5 based on forecast asset value this year.

The Beijing-based company has secured US$350 million (HK$2.72 billion) from seven cornerstone investors willing to take a six-month lock up in return for a guarantee number of requested shares. The cornerstone investors for Sinopec Engineering’s Hong Kong IPO include: China Export & Credit Insurance Corp, China Aerospace, China Shipping and Zhong Rong Group,

Sources say these cornerstone investors have covered in total about 17.5 per cent of the overall US$2 billion IPO.

Meanwhile, Galaxy Securities, the mainland’s seventh largest brokerage firm by assets, may raise as much as US$1.57 billion through a mixed of new and old shares. The old shares represents about US$50 to US$68 million worth shares. The shares are priced at a range between HK$4.99 and HK$6.77, translating into a price to book ratio of 1.2 and 1.5 times based on the forecast asset value by the end of this year. Cornerstone investors for Galaxy Securities include: AIA, China Life, China Cinda, Genertec Capital, Sino Life Insurance, Malaysia’s sovereign wealth fund Khazanah National Bhd...
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