now loading...
Wealth Asia Connect Middle East Treasury & Capital Markets Europe ESG Forum TechTalk
Treasury & Capital Markets
Galaxy Securities, Sinopec Engineering price at low end of range
Buoyed by strong demand from retail investors, mainland brokerage China Galaxy Securities has priced its initial public offering (IPO) at HK$5.30 per share, raising HK$8.31 billion (US$1.1 billion). This is at the lower end of the final price guidance of HK$5.28 to HK$5.43. Meanwhile, Sinopec Engineering priced its IPO at HK$10.50 per share at noon, also at the low end of the final price guidance of HK$10.50 to HK$11.0 and raising HK$13.94 billion (US$1.8 billion)
Christoph Kober 16 May 2013

Buoyed by strong demand from retail investors, mainland brokerage China Galaxy Securities has priced its initial public offering (IPO) at HK$5.30 per share, raising HK$8.31 billion (US$1.1 billion). This is at the lower end of the final price guidance of HK$5.28 to HK$5.43.

 

Meanwhile, Sinopec Engineering priced its IPO at HK$10.50 per share at noon, also at the low end of the final price guidance of HK$10.50 to HK$11.0 and raising HK$13.94 billion (US$1.8 billion).

 
Five companies are in various stages of their Hong Kong IPOs at the moment, potentially raising about US$5 billion before the second quarter closes.
 
Both institutional and retail tranche of the Galaxy Securities IPO were oversubscribed, the latter by more than 28x – partially a result of engaging a record 21 bookrunners to arrange the deal. 
 
Following strong reception by individual investors, share allocation was subject to a clawback that increased the size of the retail tranche to 30% of total stock. In addition, seven cornerstone investors committed a combined US$360 million, including Malaysian sovereign wealth fund Khazanah Nasional and insurance companies AIA, China Life and Sino Life. 
 
The offering comes amid a bearish market for IPOs both in mainland China and in Hong Kong. Earlier this week, the securities regulator CSRC indicated that slowing economic growth rates do not permit an immediate resumption of IPOs in the mainland stock markets. Market participants expect recommencement to occur no earlier than 3Q13. 
 
In 2012, net profit at the Galaxy Securities dropped nearly 11% from a year earlier to 1.43 billion yuan (US$230 million). It shed nearly 2000 of its staff last year and is looking to further reduce its workforce. The securities space in China is highly competitive with concentration low among the 114 registered firms. At end of September 2012, China Galaxy Securities recorded a market share of 3.9% by revenue, making it the sixth largest brokerage in the country. It ranks first in the country when looking at securities brokerage net revenue only, listing documents show.
 
Proceeds of the IPO will be used to finance expansion of the brokerage’s margin financing and securities lending offerings. ABCI, Galaxy International, Goldman Sachs, JP Morgan, and Nomura acted as joint global coordinators in the deal alongside 16 joint bookrunners and joint lead managers. Shares will list on the Hong Kong exchange on May 22.
 
Separately, Sinopec Engineering confirmed a final price of HK$10.50 at noon today, raising HK$13.94 billion (US$1.8 billion). Seven cornerstone investors took up US$350 million of the offering. Citic Securities, J.P. Morgan and UBS acted as joint sponsors as well as joint global coordinators alongside Goldman Sachs. Nine other banks rounded up the group of bookrunners.
 
The company conducts engineering, procurement and construction projects (EPC) in various industries, including refinery, petrochemical, utilities and infrastructure. About 40% of the proceeds will be used to support operations of EPC contracting services, 23% to establish six R&D centres for engineering and construction technologies, and 11% to improve overseas market networks. 
 
Meanwhile, the Langham Hospitality Investments trust – controlled by Great Eagle Holdings (0041.HK) – is opening its retail books today for an IPO that could raise up to HK$4.56 billion (US$590 million). The indicative price range of shares is HK$4.65 to HK$5.36. The trust includes three Hong Kong hotels popular with wealthy Chinese travelers, including the Langham, Langham Place and Eaton.
 
Shares are expected to start trading on May 30. Deutsche Bank and HSBC Holdings act as joint global coordinators and joint sponsors. In addition, Citi is a joint bookrunner and Credit Suisse a joint lead manager.
 
Pointing to how the Hang Seng index lags residential property prices on a three year return basis amid government-imposed curbs, Jonathan Garner, chief Asian and Emerging Market Equity Strategist at Morgan Stanley, said Monday: “I think what you will see is a diversion of liquidity from the property market towards the other major asset market in Hong Kong: the stock market.”
 
Hopewell Hong Kong Properties, a spin-off from Hopewell Holdings, is ending its investor education in Asia today, continuing with meetings in London, Boston and New York next week. 
 
Proceeds of its HK$6.4 billion offering are to be used for the development of the Hopewell Centre II in Wanchai.
 
 
 

 

Conversation
Nneka Chike-Obi
Nneka Chike-Obi
head of APAC ESG ratings and research
Sustainable Fitch
- JOINED THE EVENT -
6th ESG Summit
Beyond the hype
View Highlights
Conversation
Yulanda Chung
Yulanda Chung
head of sustainability, institutional banking group
DBS
- JOINED THE EVENT -
In-person roundtable
Beyond Covid: Emerging trends in a changing lending landscape
View Highlights