* IPO to be priced at HK$1.75, near mid-point of range -
* Chinalco Mining IPO biggest in Hong Kong in one month
* Share offering comes on the back of gains in local stocks
HONG KONG, Jan 24 A unit of China's top
aluminium group Aluminum Corp of China (Chinalco) is set to
raise $400 million in the biggest Hong Kong IPO in about one
month, benefiting from gains in the local stock market and keen
demand from cornerstone investors.
Underwriters have recommended that Chinalco Mining Corp
International price the IPO at HK$1.75 per share, but
the final decision will be made at a Chinalco board meeting in
Beijing, sources with knowledge of the deal said on Thursday.
The sources declined to be named as they were not authorized to
speak publicly on the matter.
Deal starved-investment bankers and prospective IPO
candidates have kept a close eye on the share offering to gauge
whether investors are ready to jump back into the market after a
dismal year for new listings. In 2012, the volume of new
issuance in Hong Kong fell to the lowest since 2008.
Chinalco Mining, which is developing a
copper-molybdenum-silver mine in central Peru, offered 1.76
billion new shares, putting the total deal at HK$3.1 billion
($400 million). The Chinalco unit had marketed the IPO at
HK$1.52 to HK$1.91 per share.
Five cornerstone investors agreed to buy a combined $240
million of shares in the IPO, securing demand for more than half
of the deal, according to the IPO prospectus. The investors were
something of a who's-who of the commodities world, including
trader Trafigura, a unit of the Louis Dreyfus
Commodities group and mining company Rio Tinto plc.
An external communications firm, acting on behalf of
Chinalco Mining, declined to comment on the IPO details.
Pricing above the midpoint of the range could bode well for
upcoming deals, including the up to $174 million IPO by
PanAsialum Holdings and $105 million listing by Time
Watch Investments Ltd.
Watchmaker Time Watch and PanAsialum, which produces
aluminium accessories including shells for the iPhone and iPad,
are set to price their deals next week, Thomson Reuters
publication IFR previously reported.
The Chinalco Mining IPO is the biggest in Hong Kong since
China Machinery Engineering Corp (CMEC) raised $575.4
million in mid-December.
CMEC's stock has surged 30 percent from the offering price,
while the Hang Seng Composite Index - Materials of
mining and materials companies is up 7.7 percent over the same
BNP Paribas and Morgan Stanley were hired
as joint global coordinators, with CCB International, China
International Capital Corp (CICC), HSBC and Standard
Chartered Plc also acting as joint bookrunners for the
Chinalco Mining plans to use 30 percent of the proceeds to
fund investments in the Toromocho Project in Peru, with another
30 percent set aside to pay down a loan to its parent and 30
percent for acquisitions and expansion of non-ferrous and
The remaining 10 percent will be used for working capital
and general corporate purposes, the company said.
Chinalco Mining is set to start trading on the Hong Kong
stock exchange on Jan. 31.