Hong Kong IPO market heats up with $3.5 billion Sinopec unit, Galaxy Securities deals

Sun May 5, 2013 2:44am EDT
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article | Single Page
[-] Text [+]

By Fiona Lau and Elzio Barreto

HONG KONG (Reuters) - A unit of Sinopec Group and brokerage China Galaxy Securities are launching Hong Kong IPOs on Monday seeking to raise up to $3.5 billion in total, injecting life into Asia's moribund IPO markets where deal values more than halved in the first quarter of the year.

The massive initial public offerings (IPOs) have been eagerly anticipated in Hong Kong and their success could trigger a wave of other deals, ranging from hotel operators to banks looking to sell new shares in coming months.

Sinopec Engineering (Group), a unit of Asia's largest oil refiner Sinopec (600030.SS: Quote), is offering 1.33 billion shares in an indicative range of HK$9.8 to HK$13.1 each, putting the deal value at up to HK$17.4 billion ($2.24 billion), sources said on Sunday.

At the top end, the deal would be Hong Kong's largest IPO since People's Insurance Company (Group) of China (1339.HK: Quote) raised $3.56 billion in late November.

The offer values Sinopec Engineering at 9-12 times its forecast earnings in 2013, added the sources, who declined to be identified because details of the deal are not yet public.

China Galaxy Securities, whose larger rivals include Citic Securities (600030.SS: Quote)(6030.HK: Quote) and Haitong Securities (600837.SS: Quote)(6837.HK: Quote), is offering about 1.5 billion shares in an indicative range of HK$4.99 to HK$6.77 each, the sources said. The range is equivalent to a price-to-book ratio of 1.19 to 1.49 times.

The company initially planned for a dual listing in Shanghai and Hong Kong, but gave up plans for a simultaneous offering in mainland China after the country's securities regulator froze IPO approvals late last year.

The two deals underscore a pick-up in activity after IPO issuance in Asia ex-Japan plunged 56 percent to $3.3 billion in the first quarter, making it the worst start to a year for new share listings since the first quarter of 2009, according to Thomson Reuters data.   Continued...