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Friday November 20, 2009

Demand holds up for Asian IPOs


Asia dominates global share offerings this year as economies recover

HONG KONG: Two big initial public offerings in Asia made double-digit gains yesterday, while a third IPO raised US$3.9bil, showing demand holding up strongly in the face of a flood of new issues.

Asia has dominated as the world’s top region for companies tapping markets for money this year, as its economies have zoomed ahead of other parts of the world still trying to inch out of a recession.

But with a packed pipeline hitting the market, investors are getting more wary of supporting offerings that appear to be overpriced or similar to peers already in the market.

“If you have the right fundamentals and the right pricing, investors will support you,” said Teresa Chow, senior portfolio manager at RBC Investment Management. “The fund flows right now are still quite strong.”

China Minsheng Banking Corp, the country’s seventh largest listed bank, raised US$3.9bil when it priced its Hong Kong IPO around the mid-point of an indicated range, sources said yesterday.

Meanwhile, shares in Malaysia’s leading mobile provider, Maxis Bhd, and Chinese developer Longfor Properties Co rose sharply in their local debuts.

Minsheng will rank as fifth largest IPO in the world this year, while Maxis’ US$3.3bil offering currently ranks sixth. Las Vegas Sands is pricing the IPO of its Macau operations this weekend and is expected to raise up to US$3.35bil.

That will mean six of the top 10 IPOs globally will have come from Asia-Pacific companies, accounting for half of the near US$42bil raised.

And the Asia IPO glut doesn’t stop there, with Hong Kong the centre of most activity.

China’s biggest wind power generator, Longyuan, plans to raise up to US$1.5bil through a Hong Kong IPO, launching its roadshow on Nov 23. Australian commodities group, Resourcehouse, which plans to raise US$3bil, will launch its investor roadshow soon. Russia’s UC Rusal, the world’s largest aluminium maker, hopes to get approval to list a roughly US$2bil IPO in Hong Kong at the end of the month.

That means that more than US$6bil worth of IPOs are planned to hit Hong Kong before the year ends.

Big-name investors have lined up to support several offers.

China-focused private equity fund Hopu Investment Management plans to invest up to US$1bil in Minsheng, which is already listed in Shanghai.

Billionaire investor George Soros, Tiger Fund, Temasek, China Life Insurance and China Pacific Insurance Group have committed to buy Minsheng’s shares from the institutional portion of its IPO, sources said earlier.

In Malaysia, Fidelity was among four cornerstone investors for Maxis. Its shares traded as high as RM5.50, up 10% from its RM5 institutional offer price.

Pankaj Kumar, chief investment officer at local insurer Kurnia Insurans, which bought some Maxis shares, said the opening was in the expected range. “It reflects a certain degree of confidence in the company and some funds may be building positions because they didn’t get sufficient allocations,” he said.

Maxis houses just the Malaysian business, leaving the fast-growing Indian and Indonesian operations with unlisted parent Maxis Communications Bhd, controlled by reclusive Malaysian billionaire T. Ananda Krishnan. Ananda, as he is known, is re-listing the stripped-down company he took private two years ago in the country’s largest IPO.

Shares in property company Longfor, which raised US$912mil, hit a high of HK$8.19, up 15.8% from its a Hong Kong IPO price of HK$7.07, which was near the top of its indicated range. Longfor’s share price represents a multiple of about 16 times forecast 2010 earnings.

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


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