UPDATE 3-China's Fosun prices $1.5 bln HK IPO at top of range
(For an expanded IPO diary, please click on <HK/IPOMENU>) (Adds fund manager comment and details)
By Kennix Chim
HONG KONG, July 6 (Reuters) - China's top privately owned conglomerate, Fosun International Ltd., raised US$1.48 billion, pricing its Hong Kong initial public offering at the top of an indicated range, sources familiar with the deal said on Friday.
Dubbed a "Chinese Hutchison" after the sprawling Hutchison Whampoa Ltd. (0013.HK) conglomerate controlled by Hong Kong billionaire Li Ka-shing, Fosun resembles a private equity fund, buying assets on the cheap and selling them via public listings.
This business model attracted 11 cornerstone investors -- including Li Ka-shing and Maurice Greenberg, former chief of American International Group (AIG.N) --who bought a combined $220 million of the offering.
Others in the group included Henderson Land (0012.HK) Chairman Lee Shau Kee, China Pacific Insurance (Group) Co. and First State Investment (Hong Kong) Ltd.
Billionaire Saudi Prince Alwaleed bin Talal plans to subscribe for shares, although some investors think the deal may have been priced too high.
"Fosun's pricing is greedy," said Yang Liu, China-focused fund manager at Atlantis Investment Management, noting other firms offered lower valuations and higher growth. "Investors are just inspired by its famous cornerstone investors." Founded by China's ninth-richest person, Guo Guangchang, and three other Fudan University graduates, Fosun sold 1.25 billion shares, or 20 percent of its enlarged share capital, at HK$9.23 each after drawing strong investor demand, the sources said.
Its indicated range was HK$6.98 to HK$9.23.
The company plans to use the IPO proceeds to repay debt and make acquisitions.
The issue price values the company at 24.3 times estimated 2007 profit, a premium to peers such as Chinese conglomerates CITIC Pacific (0267.HK) and Shanghai Industrial (0363.HK), which trade at 20 to 22 times forward earnings, respectively.
The company generated orders for more than 230 times the shares initially on offer to Hong Kong retail investors, triggering an option that will increase the retail portion to 50 percent from 10 percent of the total offering, one source said.
"Fosun's valuation will jump as it owns some mainland-listed companies whose share prices have surged with the strong Chinese stock market," said Stephen So, director at China Everbright Securities.
Fosun's sponsors, UBS (UBSN.VX) (UBS.N), Morgan Stanley (MS.N) and China International Capital (CICC), on average expect the company's 2007 net profit to rise 77 percent to 1.9 billion yuan and gain a further 46 percent to 2.8 billion yuan in 2008.
Fosun owns publicly traded companies including Shanghai-listed Nanjing Iron & Steel (600282.SS), Fosun Pharmaceutical Co. (600196.SS) and Shanghai Yuyuan Tourist Mart (600655.SS) and Hong Kong-listed Forte 2337.HK and Zhaojin Mining (1818.HK).
The Shanghai-based company has three main businesses -- steel, property and pharmaceuticals, while it also has exposure to the retail, mining and securities sectors.
Fosun Group, wholly owned by Fosun International, ranked fourth among all privately owned enterprises in China in terms of revenue in 2005 and was the biggest conglomerate, according to the China Association of Industry and Commerce.
Fosun begins trading on July 16, under the symbol "656" (0656.HK). (US$1=HK$7.8)
- Obama and Castro shake hands, Zuma humiliated at Mandela memorial |
- Google bus blocked in San Francisco gentrification protest
- Thai PM urges protesters to take part in election |
- Reporter allowed to keep sources secret in Colorado theater shooting
- U.S. regulators seek to curb Wall St. trades with Volcker rule