China Coal raising up to $1.7 bln in IPOadmin
China’s second-biggest coal group by revenue, China Coal Energy Co., is set to raise up to US$1.7 billion (HK$13.3 billion) in a Hong Kong IPO after setting an indicative price range of HK$3.20 to HK$4.05 a share, a person familiar with the deal said on Wednesday.
China Coal, which kicked off its formal IPO marketing roadshow, is selling 3.25 billion shares, or 28.9 percent of its enlarged share capital, at a price range equal to 9.3 times to 11.8 times 2007 expected earnings, the source said.
China’s top coal producer, Shenhua Energy Co. , currently trades at about 13 times 2007 earnings.
China is the world’s top coal producer and consumer.
Investor interest in Chinese IPOs has remained undimmed after a record year for new listings in Hong Kong, where firms have raised a combined $33.4 billion, according to Dealogic.
The institutional portion of Chinese gold miner Zhaojin Mining Industry Co.’s IPO is more than 100 times covered, leading its underwriters to close the books on Wednesday, two days ahead of schedule.
China Coal, which will price the deal on Dec. 13 and debut six days later, has already agreed to sell a combined US$125 million stake to U.S. private equity firm First Reserve Corp. and coal miner American Metals & Coal International, sources have said.
The company is earmarking up to 20 percent of the offering for a number of corporate investors, its preliminary prospectus said, which sources said will likely come from a group of Hong Kong tycoons who typically invest in new listings.
China Coal said last month it would fold its 62 percent stake in Shanghai Datun Energy Resources Ltd. into its new listed unit, which includes businesses ranging from coke production to equipment manufacturing.
The coal operation accounted for 80 percent of China Coal’s first-half revenue, while coke and coal mining equipment accounted for 6.9 percent and 6.6 percent respectively.
The company produced 50.12 million tonnes of coal in 2005, compared with Shenhua’s 121 million tonnes and Yanzhou Coal Mining Co. Ltd.’s 34.7 million tonnes.
State-backed China Coal plans to use 65 percent of the IPO proceeds to build open pit mines and underground mines, and most of the rest to repay bank loans, its prospectus said.
Rival Datong Coal was this year’s first Shanghai listing, and its shares are up by more than a fifth since a June 23 debut after it raised US$236 million.
China International Capital Corp., Citigroup and Morgan Stanley are handling China Coal’s deal. (US$=HK$7.8)