Stocks News
- China Coal kicks off Hong Kong IPO
Date: 30-Nov-2006 Sources: (Xinhua Online)
China Coal Energy Co, the country's leading coal mine operator, started its initial public offering (IPO) in Hong Kong yesterday, hoping to raise up to 1.7 billion U.S. dollars with a price range from 3.2 HK dollars(41 U.S. cents) to 4.05 HK dollars (52 U.S. cents).
China's second-largest coal group by revenue, is selling 3.25 billion shares, hoping to use 65 percent of the IPO's proceeds to improve capacity and pay off bank loans, the company said in its prospectus.
China Coal Energy is the third mainland coal group to list in Hong Kong after Yanzhou Coal Mining Co and Shenhua Energy Co. Both attracted a great deal of interest from investors eyeing profits from the world's fastest-growing economy.
'Shenhua Energy has had a very good market performance, which surely favours the listing of China Coal Energy,' said Louise Wong, director at Phillip Asset Management, a Hong Kong-based securities consulting group.
'The mainland has made great efforts to regulate coal operations in the world's biggest coal consuming country, including the upcoming energy law aiming to improve power supplies. All of this serves to attract energy shareholders,' Wong told China Daily.
The mainland IPO fever has not shown any sign of cooling down as a number of H-share issuers queue up to go public after a record year for listings. Investors will continue to ride the wave of mainland IPO fever, said Wong.
Hong Kong's stock exchange is busy hosting IPOs from the mainland, including the Industrial and Commercial Bank of China's historic 22 billion dollars offering, and has raised a combined 33.4 billion dollars from mainland IPOs so far this year, according to Dealogic, a market-data provider.
Zhaojin Mining Industry Co, a gold miner from East China which kicked off its offering ahead of China Coal Energy, has had its institutional portion oversubscribed more than 100 times, forcing its underwriters to close the book two days ahead of schedule.
State-owned China Coal Energy will fix its offering price on Dec. 13 and start market trading on Dec. 19.
It has been reported that China Coal Energy has already agreed to sell stakes worth as much as 125 million dollars to U.S. private equity firm First Reserve Corp and American Metals & Coal International, a U.S. mining firm.
The company's preliminary prospectus disclosed that it has earmarked up to 20 percent of the offering for a number of Hong Kong tycoons enthusiastic about new listings.
Shenhua Energy, China's top coal miner, produced 121 million tons of coal last year, followed by China Coal Energy at 50.12 million tons, while Yanzhou Coal Mining had an output of 34.7 million tons.
Coal accounts for more than 70 percent of the mainland's total energy consumption, and domestic output continues to increase rapidly as energy demands soars.
Demand for the fuel may surge 8.5 percent to 2.51 billion tons by next year, according to the National Development and Reform Commission.
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