Sinopec unit prices $1.8 bln Hong Kong IPO near bottom-IFR

HONG KONG Wed May 15, 2013 11:24pm EDT

HONG KONG May 16 (Reuters) - The engineering unit of China's Sinopec Group, Asia's largest refiner, raised $1.8 billion in Hong Kong's biggest initial public offering in almost six months, IFR reported on Thursday, citing a source familiar with the deal.

The offering comes after state-owned China Galaxy Securities Co Ltd raised $1.1 billion in an IPO just a day earlier, adding a much needed jolt of activity to equity capital markets in Hong Kong that have remained largely moribund for most of the year.

Sinopec Engineering (Group) Co Ltd, as the unit is called, sold 1.33 billion new shares at HK$10.5 each, said IFR, a Thomson Reuters publication.

The company launched the deal on May 6, with an indicative range of HK$9.80 to HK$13.10 per share. On Wednesday it narrowed the range to HK$10.50-11 per share.

Hong Kong, the top global IPO destination for two years straight in 2009 and 2010, has lingered in 13th place in global rankings so far this year behind countries like Iraq and New Zealand, with $1.1 billion worth of deals before the two large offerings by China Galaxy and Sinopec Engineering.

The two deals will vault Hong Kong to third among global exchanges in IPO volumes as of mid-May, behind New York and Sao Paulo's Bovespa.

Sinopec Engineering secured commitments for $350 million worth of shares from seven investors including logistics and transportation company China Shipping (Hong Kong) Holdings and units of China Aerospace Science and Technology Corp.

The company plans to use most of the IPO proceeds to support its engineering, procurement and construction (EPC) services business and set up six research and development centers in mainland China.

Citic Securities , JPMorgan and UBS were hired as sponsors of the offering, with Goldman Sachs also acting as a joint global coordinator on the deal. A group of nine other banks will also help manage the IPO as joint bookrunners.

The banks stand to earn as much as $33.8 million in fees for managing the IPO, equivalent to a 1 percent underwriting commission and an up to 0.8 percent incentive fee, according to the IPO prospectus.

Sinopec Engineering is controlled by China Petrochemical Corp, the state-owned integrated oil behemoth also known as Sinopec Group that is also the parent of China Petroleum and Chemical Corp .

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