Stocks News
- Baosteel revives New York listing plan
Date: 11-Jan-2007 Sources: (Shenzhen Daily)
BAOSTEEL Group, China's biggest steelmaker, is making preparations to list core steel assets in New York, sources familiar with the situation said yesterday.
Top management has decided to pursue a listing there and Baosteel has launched an international search for accountants and lawyers to help it meet U.S. listing standards, the sources said. No time frame for a New York initial public offering has been set.
'Top management of Baosteel made the basic decision in November to launch an IPO in New York,'said a source close to the company who is familiar with the preparations.
Baoshan Iron and Steel Co., the Shanghai-listed arm of the group, controls almost all its steel assets.
The group has considered an overseas listing at various times over more than half a decade, but each time suspended those plans because of stock market or industry conditions.
Analysts believe now would be an ideal time to pursue a New York listing because of surging foreign demand for Chinese assets and the Chinese steel industry's recovery in the past year.
A Baosteel spokesman declined to comment beyond repeating earlier statements that the company was always seeking an appropriate time to list abroad.
'Overseas listing has always been our goal. Our company is still looking for good opportunities to go public overseas, so as to become an international corporation,'group president Xu Lejiang said last September.
Some investment bankers seeking business with Baosteel said the group might simultaneously list in Hong Kong as well as in New York, as some other domestic companies have done, but this could not be confirmed.
Because of the large amount of accounting work and other documentation needed for an overseas IPO, the actual listing of Baosteel shares in New York might not take place by the end of this year, bankers said.
Baosteel's Shanghai-listed shares soared 110 percent to an all-time high last year, boosted by a big rally in the overall domestic stock market as well as by a profit recovery among domestic steelmakers.
The listed company's third-quarter net profit jumped 42 percent from a year earlier to 4.71 billion yuan (US$604 million), beating market expectations.
Baosteel's chairwoman Xie Qihua told executives in a Dec. 27 speech that Baosteel plans more domestic acquisitions to extend its dominance of the industry.
'We should have a sense of urgency to actively join in the restructuring of Chinese mills,'' Xie said, according to a Bloomberg report yesterday.
Takeovers will help advance Xie's goal of making Baosteel a top three global producer by 2010. China is trying to force mergers of its 260 steelmakers to create bigger companies who can compete with global rivals and boost their bargaining power with suppliers of raw materials such as iron ore.
'Getting bigger will boost Baosteel's power in pricing steel products and bargaining for cheaper raw material,'' said Lu Yizhen, who oversees more than 4 billion yuan of shares, including Baoshan Steel, at CITIC-Prudential Fund Management Co.
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