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Investors bet on select offers
(China Daily/Agencies)
Updated: 2009-11-13 08:57

Investors bet on select offers

Strong demand for a piece of a Chinese property company and a Chinese brokerage shows that select IPOs are still being coveted despite investor fatigue with the surge of new listings.

Chinese property developer Longfor Properties Co raised $912 million yesterday, pricing its Hong Kong initial public offering at the top end of an indicated range, according to two sources close to the deal.

Billionaire investor George Soros bought HK$200 million ($25.81 million) worth of shares, while the $293-billion sovereign fund China Investment Corp (CIC) also invested through the international tranche, another source said.

Asia has emerged as the world's top spot for companies tapping markets for funds this year as the region's economies inch out of recession, though the abundant supply is also keeping high price expectations in check.

Longfor sold 1 billion shares, or 20 percent of its enlarged share capital, at HK$7.07 each, compared with an indicative range of HK$6.06 to HK$7.10, according to the sources.

The pricing near the top end of the range indicates that there is still demand for Chinese property IPOs despite a glut of offerings in the last few months.

Separately, China Merchants Securities Co, which plans to raise up to 11.1 billion yuan ($1.63 billion) through an initial public share offer in Shanghai, said on Wednesday its IPO has been nearly 94 times oversubscribed.

The medium-sized brokerage said in an exchange filing that it plans to sell 358.55 million shares at 31 yuan apiece, the top end of an indicated price range, in China's third brokerage IPO.

Longfor's offering price range represented a multiple of about 12 to 14 times forecast 2010 earnings. By comparison, peer R&F trades at 11 times 2010 forecast earnings, while Greentown China trades at 9.9 times forecast 2010 earnings.

The deal has attracted about $10 billion worth of orders, or about 12 times the number of shares earmarked for institutional investors, in which more than half are long-term funds and hedge funds, another source close to the deal said.

Cornerstone investors

The company also generated orders for 56 times the shares initially on offer for Hong Kong retail investors. It will trigger the clawback option to increase the retail portion of the global offering to 40 percent from an initial 10 percent.

Longfor has signed up five cornerstone investors, including the Government of Singapore Investment Corp, Temasek Holdings, Hong Kong Land, Ping An Insurance and Bank of China Group Investment Ltd, for a combined $197.5 million worth of shares.

Longfor's trading debut is scheduled for Nov 19, under the symbol "960". Citigroup, Morgan Stanley and UBS are handling the Longfor deal.

Longfor is only one of several IPOs hitting the Hong Kong market in the next few weeks, as offerings ranging from $300 million to $3 billion queue up for debuts before the year-end.

Resourcehouse, the commodity group run by Australian Clive Palmer, has set a timetable for its estimated $3 billion Hong Kong IPO, sources said yesterday.

The company plans to price on Nov 30 and debut on Dec 11, sources said.

China Minsheng Banking Corp, which plans to raise as much as $4.07 billion in a Hong Kong IPO, will open the offering up to retail investors today, sources say.

Related readings:
Investors bet on select offers Longfor looking to launch HK$7.1b IPO
Investors bet on select offers Longfor Properties IPO raises HK$7.07b

And Las Vegas Sands, the Las Vegas casino company spinning off its Macao business, will hold a press conference for the IPO on Sunday.

The company hopes to raise up to $3.35 billion through the Hong Kong listing, an offering that sources say is already fully covered by institutional investors.

Unlike other IPOs, Las Vegas Sands will not have any cornerstone investors taking a significant stake in the company before the listing, sources say.

But not everyone is jumping on to the IPO bandwagon. Singapore's Wilmar International, the world's largest listed palm oil company, said yesterday it will not go ahead with its plan to list its China operation in Hong Kong unless the market recovers.

Earlier this year, Wilmar said it plans to list its China operation in an IPO in Hong Kong, which was expected to raise around $3.5 billion.

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