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Sinopec Engineering prices largest Hong Kong IPO
Amy Lam 27 May 2013

 Sinopec Engineering (中石化炼化工程), an engineering unit of China’s largest petroleum refiner, has raised HK$13.94 billion (US$1.79 billion) from the largest IPO in Hong Kong so far this year.


Offering 1.328 billion new H-shares, Sinopec Engineering priced them at HK$10.50 each, at the bottom of a final guidance of between HK$10.50 and HK$11. The company launched the deal with an indicative price range from HK$9.80 to HK$13.10. Institutional investors are expected to be allocated about 95%, subject to a clawback mechanism.


The transaction is effectively supported by the Chinese government as five out of seven cornerstone investors are state-owned or state-funded companies, taking up a total of US$350 million worth of IPO shares. The cornerstone investors are China Shipping HK (US$100 million), Aerospace Investment (US$60 million), Aerospace Finance (US$50 million), Harbin-based trust company Zhongrong Trust (US$50 million), trade insurance company Sinosure (US$50 million), Albertson (US$30 million) and China National Machinery Industry Corporation (US$10 million).


The IPO comes with a greenshoe option for the company to issue an additional 15% of the base offer. The size of shares offered in the IPO before the greenshoe exercise is equivalent to 30% of the total outstanding shares. Domestic shareholders are expected to own a 67% stake in the company after the IPO.


Sinopec Engineering will have a lock-up agreement where no new shares will be issued within six months after the IPO. Its controlling shareholders and cornerstone investors have agreed not to sell any shares within six months.


The list of banks involved in this deal was equally long. J.P. Morgan, CITIC Securities and UBS are on the top as joint sponsors. The three banks and Goldman Sachs are joint global coordinators, joint bookrunners and joint lead managers. Other bookrunners involved are CICC, HSBC, Haitong, Citi, Bank of America Merrill Lynch, Deutsche Bank, CMB International, BOCOM International and BOC International. – AL

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