HONG KONG — A unit of Sinopec Group and the brokerage firm China Galaxy Securities are introducing initial public offerings in Hong Kong on Monday, seeking to raise a total of as much as $3.5 billion.
Sinopec Engineering, a unit of Sinopec, the largest Asian oil refiner, is offering 1.33 billion shares in an indicative range of 9.8 Hong Kong dollars to 13.1 dollars each, putting the deal value as high as 17.4 billion dollars, or $2.24 billion, two people close to the deal said Sunday.
At the top end, the deal would be the largest I.P.O. in Hong Kong since People’s Insurance Co. of China raised $3.56 billion in late November.
The offer values Sinopec Engineering at 9 to 12 times its forecast earnings in 2013, said the people close to the deal, who declined to be identified because details of the deal were not yet public.
Meanwhile, China Galaxy Securities, whose larger rivals include Citic Securities and Haitong Securities, is offering about 1.5 billion shares in an indicative range of 4.99 dollars to 6.77 dollars each, the people said. The range is equivalent to a price-to-book ratio of 1.19 to 1.49 times. The ratio is used to compare a company’s book value with its current market price.
The company had planned for a dual listing in Shanghai and Hong Kong, but gave up plans for a simultaneous offering in mainland China after the country’s securities regulator froze I.P.O. approvals late last year.
Such large I.P.O.’s have been eagerly anticipated in Hong Kong and their success could set off a wave of other deals in coming months involving companies like hotel operators and banks looking to sell new shares.
The two deals underscore a pickup in activity after I.P.O. issuance in Asia outside of Japan plunged 56 percent to $3.3 billion in the first quarter, making it the worst start to a year for new share listings since the first quarter of 2009, according to Thomson Reuters data.
I.P.O.’s in Hong Kong are down 20 percent so far in 2013 from the same period of 2012, to $1.05 billion, data show. After being a global I.P.O. hub for several years, the city had only $7.72 billion worth of deals in 2012, the lowest volume since the 2008 global financial meltdown.
Hong Kong’s lackluster performance is in sharp contrast to Southeast Asia, where a string of deals including BTS Infrastructure Fund and the real estate investment trust Mapletree China, backed by Temasek Holdings, have kept bankers busy.
Other large deals that are likely to be held in Hong Kong this year include a series of commercial real estate spinoffs from Hong Kong property and investment companies, including an I.P.O. by NW Hotel Investments, which is part of New World Development, that could reach $1 billion.
Great Eagle Holdings also plans to spin off its Langham hotel chain through an $800 million I.P.O., while the property and infrastructure group Hopewell Holdings is looking to raise as much as $800 million from a spinning off of its property and hospitality business, Hopewell HK Properties.
Sinopec Engineering was formed last September, consolidating eight engineering and construction units of Sinopec Group, as the state-owned giant looked to expand its business overseas.
It is controlled by Sinopec Group and Sinopec Corp., which hold stakes of 2 percent and 98 percent, respectively.
Citic Securities, JPMorgan and UBS were hired as sponsors of the Sinopec Engineering offering.
China Galaxy International, Goldman Sachs and J.P. Morgan are acting as sponsors of the China Galaxy deal, with a group of 13 other banks also helping arrange it. The number of banks on the I.P.O. puts it near the record 17 hired by PICC for its listing last year.
Article source: http://www.nytimes.com/2013/05/06/business/global/06iht-sinopec06.html?partner=rss&emc=rss