HK stocks fall as Minsheng IPO fuels valuation concerns

Hong Kong stocks fell for a third day on concern China Minsheng Banking Corp's share sale will lure investors away from equities made more expensive by a rally since March.

The Hang Seng Index slid 0.9 percent to close at 22,643.16, extending its losses in the past three sessions to 1.3 percent. The Hang Seng China Enterprises Index, which tracks so-called H-shares of mainland companies listed in Hong Kong, fell 1.6 percent to 13,470.98.

Industrial & Commercial Bank of China Ltd, which trades at 3.3 times its book value, dropped 2.4 percent, while Bank of China Ltd, priced at 2.3 times book, slid 2.1 percent. People familiar with the matter said China Minsheng Banking's HK$30 billion ($3.9 billion) offering was priced at 1.77 times book.

Affinity said to be in final talks for TheFaceShop sale

Affinity Equity Partners Ltd, a Hong Kong-based buyout fund, is in final talks to sell South Korean cosmetics maker TheFaceShop to LG Household & Health Care Ltd for more than $400 million, said a person with knowledge of the matter.

Affinity and TheFaceShop's founder Jung Woon-Ho plan to sign an agreement on the sale in two weeks, the person said, asking not to be identified before an announcement. The private-equity fund bought control of the company in October 2005.

This is Affinity's second attempt to sell TheFaceShop after it failed to sell the unit to Carlyle Group in July last year because of price differences. Firms including TPG Inc and Goldman Sachs Group Inc are taking advantage of a rally in Asian markets to sell stakes in companies.

Sany Heavy raises HK$2.4 billion in IPO, e-mail says

Sany Heavy Equipment International Holdings Co, China's largest maker of roadheaders for coal mining, raised HK$2.4 billion ($310 million) from a Hong Kong initial public offering, said a sale document.

The Shenyang, northeastern China-based company sold 500 million new shares, or a 25 percent stake, at HK$4.80 each, according to the document e-mailed to fund managers late Wednesday. Sany earlier offered the shares at a range of HK$4.10 and HK$4.80.

The company is raising money to build new production facilities, purchase equipment, expand and upgrade existing plants, a share sale document e-mailed to fund managers last week said.

HSBC Holdings Plc and Standard Chartered Plc managed the sale. The stock will start trading November 25.

Galaxy Entertainment seeks $1-$1.5b debut loan

Galaxy Entertainment Group is sounding the market for a $1-$1.5 billion debut loan to complete work on its mega hotel and casino project in Macao, banking sources said yesterday. Mainland banks are actively talking with the potential borrower, one of six gambling license holders in the Chinese enclave.

Galaxy Entertainment recently said that its subsidiary, Galaxy Casino, would resume development of its Galaxy Macau Resort with a targeted opening in the first quarter of 2011. The resort will include Galaxy, Okura and Banyan Tree hotels.

Galaxy Entertainment recently said that it expects total project costs for the Macao resort to rise by 40 percent, to HK$14.1 billion ($1.82 billion) from its previous estimate of HK$10.5 billion. This prompted Standard & Poor's Ratings Services on November 11 to place Galaxy Casino's B ratings on negative watch.

China Daily/Agencies

(HK Edition 11/20/2009 page3)