* Offering priced at HK$5.17/share, near low end - sources
* China CNR's Shanghai-traded shares up 8 pct in past two
(Recasts with China CNR performance in Shanghai, analyst
By Elzio Barreto and Daniel Stanton
HONG KONG, May 16 China CNR Corp Ltd
, the world's largest train maker by sales, raised $1.2
billion in a Hong Kong share offering, with pricing coming in at
the low end after a recent rally in its Shanghai-listed stock.
Bolstered by expectations of further government investment
in high-speed rail networks, China CNR has seen its Shanghai
shares jump 8 percent over the past two months and investors saw
little reason to price them higher amid weak overall demand for
"All the positives have been already priced in the stock,"
said Stuwart Chen, an analyst at Sun Hung Kai Financial in Hong
Kong. "There's no new catalyst for now."
It was the biggest attempt by a Chinese company to tap the
Hong Kong market since WH Group scrapped its plans to list last
month, with a downturn in equity markets weighing on demand even
after the pork giant cut its IPO size by two-thirds.
China CNR sold 1.82 billion new shares, equivalent to 15
percent of its enlarged share capital, at HK$5.17 each, after
marketing the offering between HK$5.00 and HK$6.20, sources with
direct knowledge of the matter said. It did not immediately
reply to requests for comment.
It will use the funds to pay down debt, buy new machinery
and invest in new rail projects. The company will start trading
in Hong Kong on May 22.
Growing demand for rail services in China helped the train
manufacturer log a 10 percent climb in net profit to 4.22
billion yuan ($677 million) last year on a 5 percent increase in
revenue to 96.8 billion yuan.
China CNR ranks first in the world in sales ahead of local
rival China South Locomotive and Rolling Stock Corp Ltd
, also called CSR Corp, and Bombardier
Transportation. But its market cap at $7.8 billion lags CSR's
It is controlled by state-owned China Northern Locomotive &
Rolling Stock Industry (Group) Corp, also known as CNRG, whose
stake is falling to about 58 percent from 72 percent before the
China CNR received commitments worth $100 million from three
cornerstone investors, with Dongfeng Asset Management agreeing
to buy $40 million worth of shares. Jinxi Axle Company Ltd
and China National Machinery Industry Corp, known as
Sinomach, each pledged to buy $30 million of shares in the
Cornerstone investors receive a guaranteed allocation in
exchange for agreeing to retain their stakes for a set period.
China International Capital Corp (CICC), Macquarie and UBS
were hired as sponsors of the deal, with Deutsche Bank and
Goldman Sachs also acting as joint global coordinators. Seven
other banks were also joint bookrunners.
The banks stand to earn up to a combined $28.8 million in
fees from the deal, equivalent to a 1.9 percent underwriting
commission and an incentive fee of up to 0.5 percent, according
to the prospectus.
($1 = 6.2306 Chinese Yuan)
(Reporting by Daniel Stanton of IFR; Writing by Elzio Barreto;
Editing by Edwina Gibbs)