UPDATE 3-China's Fosun HK debut dimmed by profit taking

(Adds fund manager comment, updates with share price and details) (For an expanded IPO diary, please click <HK/IPOMENU>)

By Kennix Chim

HONG KONG, July 16 (Reuters) - Shares of China's top privately controlled conglomerate, Fosun International Ltd. (0656.HK), rose 12 percent in their Hong Kong debut on Monday, lagging forecasts after its US$1.48 billion IPO drew heavy demand.

Founded by China's ninth-richest person, Guo Guangchang, and three other Fudan University graduates, the company's three key businesses are steel, property and pharmaceuticals. It also has exposure to the retail, mining and securities industries.

Shares of the company climbed as much as 21 percent in the morning session to an intra-day high of HK$11.18, which was in line with market expectations, but retreated in the afternoon on profit taking with a broader market decline.

The shares closed at HK$10.34, compared with the offer price of HK$9.23, valuing the company at about HK$64.6 billion (US$8.3 billion).

"Given Fosun's pricing was aggressive, and the poor performance of the Hong Kong and mainland stock markets, investors tended to take profits on the first trading day," said Lawrence Lo, vice president at Lombard Odier Darier Hentsch (Asia) Ltd.

Hong Kong-listed shares in mainland companies .HSCE fell 1.25 percent on Monday, while China's main stock index .SSEC was down 2.36 percent.

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), which have fallen 9 to 17 percent since Fosun kicked off its IPO roadshow in late of June.

STRONG DEMAND

Demand for the stake of around 20 percent in the enlarged Fosun was fuelled by Hong Kong's Hang Seng Index .HSI recent rise to record highs.

The offer was split 50:50 between retail and institutional investors. It was oversubscribed by 45 times on the retail side and more than 170 times among institutions, excluding shares pledged to cornerstone investors, sources familiar with the matter said.

Based on its share price, the company is valued at about 27 times forecast 2007 earnings, a 15 to 21 percent premium to its peers CITIC Pacific (0267.HK), at 23.4 times, and Shanghai Industrial (0363.HK), at 22.3 times forward earnings.

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 undervalued assets and later selling them via public listings.

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 also subscribed for shares.

UBS (UBSN.VX) (UBS.N), Morgan Stanley (MS.N) and China International Capital (CICC) sponsored the offering.

In another market debut on Monday, shares in Chinese hypermarket and supermarket operator Times Ltd. (1832.HK) surged 13.6 percent to close at HK$4.75 after the company's much smaller US$113 million offering.

Its shares climbed as much as 19.6 percent to HK$5.00 in intraday trade, compared with its issue price of HK$4.18.

The Times offering was sponsored by HSBC. (US$1=7.819 Hong Kong Dollar)