Two Chinese firms will debut on the Stock Exchange of Hong Kong this month.
They are China Galaxy Securities Co., Ltd. and Sinopec Engineering (Group) Co., Ltd. The former formally triggered the share sale on May 6 and the latter is scheduled to start the public subscription on May 10.
According to prospectus Galaxy Securities released for the IPO, it plans to issue about 1.57 billion shares in the IPO and the price will range from HKD 4.99 to HKD 6.77 each. It plans to debut on the bourse on May 22 and the proceeds will hit about HKD 7.82 billion to HKD 10.62 billion. It has had some cornerstone investors and they include China Life Insurance Co., Ltd. (SEHK: 2628 and SHSE: 601628), China Cinda Asset Management Corp., AIA, and Khazanah Nasional Berhad. AIA and Khazanah, the sovereign wealth management fund of Malaysia, each subscribed USD 50 million and USD 100 million worth the shares.
A top executive with the Hong Kong branch of a Chinese securities broker pointed out in an interview that introducing famed cornerstone investors would help enhance charm of the shares to other institutional investors and retail investors and almost all Chinese firms did this when launching an IPO on the Hong Kong bourse in the past. Amid the share subscription, road shows would be launched in markets including Asia, North America and Europe.
According to the prospectus of Sinopec Engineering, it plans to raise about HKD 17.4 billion through issuing 1.33 billion shares in the IPO and the share price ranges from HKD 9.8 to HKD 13.1 apiece. It has had seven cornerstone investors and they include China Export & Credit Insurance Corp. And Albertson Capital. The latter jointly subscribed USD 350 million worth the shares and the shares accounted for 15.7 percent to 21 percent of the total. If everything goes on well, the IPO will become the biggest one on the Hong Kong bourse this year.
In line with industry observers, there will be great possibility for them to take the first two places among all firms that debut on the Hong Kong bourse this year in terms of proceeds. The Hong Kong stock market lost the No.1 position globally in terms of IPO financing amount last year and the two IPOs will play a significant role in helping it resume the position. In addition, provided that they succeed in launching the IPOs, more Chinese firms will get listed on the bourse later.
