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(Adds details on valuations, investors)
HONG KONG, June 24 (Reuters) - China's largest privately
owned conglomerate, Fosun International, plans to raise as much
as US$1.4 billion in a Hong Kong initial public offering,
sources familiar with the deal said on Sunday.
Fosun, which will kick off a formal marketing roadshow on
Monday, is offering 1.25 billion shares, or roughly 20 percent
of its enlarged share capital, at HK$6.48 to HK$8.68 apiece, the
sources said.
Trading of the shares will start on July 16.
Founded by four Shanghai-based entrepreneurs, the company's
three key businesses are steel, property and pharmaceuticals,
while it also has exposure to the retail, mining and securities
industries.
Fosun's sponsors, UBS (UBSN.VX), Morgan Stanley (MS.N) and
China International Capital (CICC), on average expect the
company's net profit to rise 77 percent to 1.9 billion yuan
(US$249.2 million) in 2007 and gain a further 46 percent to 2.8
billion yuan in 2008, boosted by its steel and securities units.
The indicative price range values Fosun at 13-17.7 times
forecast 2008 earnings, one of the sources said.
By comparison, Chinese conglomerates CITIC Pacific (0267.HK)
and Shanghai Industrial (0363.HK) trade respectively at 16 to 19
times 2007 earnings and 15 to 16 times 2008 forecast earnings.
Called 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 on via public
listings.
It owns stakes in companies including Forte Land (2337.HK),
which it listed in 2004, and Zhaojin Mining (1818.HK), which
went public in 2006.
Fosun will use its IPO proceeds to fund investments.
The Shanghai-based company's major businesses, particularly
steel and property, are cyclical and have volatile earnings and
cash flows, its sponsors said in pre-deal reports.
But China's surging economy is expected to continue boosting
steel demand.
Fosun plans to sell US$20 million worth of offering shares
to each of 11 cornerstone investors, including Li Ka-shing,
Henderson Land (0012.HK) Chairman Lee Shau Kee, and the
Government of Singapore Investment Corp. (GIC), people familiar
with the deal said.
In addition, billionaire Saudi Prince Alwaleed bin Talal
plans to buy at least US$30 million worth of Fosun shares in the
institutional portion of the deal.
Following is a list of Fosun's portfolio companies:
Business Stake (%)
Nanjing Steel United 60
Tangshan Jianlong 26.7
Ningbo Steel 20
Shanghai Forte (2337.HK) 52.3
Fosun Pharmaceutical Co. (600196.SS) 49
Shanghai Yuyuan Tourist Mart (600655.SS) 18.2
Tebon Securities 25.7
Zhaojin Mining(1818.HK) 17.3
Huaxia Mining 20
NOTE: Source for table is a Morgan Stanley research report.
(US$1=HK$7.8=7.624 Yuan)
