(For an expanded IPO diary, please click on <HK/IPOMENU>)
(Adds fund manager comment and details)
By Kennix Chim
HONG KONG, July 6 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
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
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
"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
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
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"