* Prices IPO at HK$33.00/share, top of marketing range
* Retail tranche 600 times oversubscribed
* Shares to debut in Hong Kong on March 6
(Adds Poly Culture's business, use of proceeds, underwriter,
HONG KONG, Feb 28 Poly Culture Group Corp Ltd,
China's largest art auctioneer, is set to raise $331 million
after pricing its Hong Kong initial public offering (IPO) at the
top of its marketing range thanks to strong demand for stocks in
The world's third-biggest auctioneer after runaway leaders
Christie's and Sotheby's is following in the recent
footsteps of a funeral services operator, cooking wine maker and
night club owner, who received buying offers far in excess of
the number of shares on sale.
Those three Chinese companies saw their share prices shoot
up on listing because of buying by investors turning to unusual
industries in search of growth.
Similar demand enabled Poly Culture to price its shares at
the very top of a HK$28.20 to HK$33.00 indicative range, Thomson
Reuters publication IFR reported on Friday citing people
familiar with the IPO.
The auctioneer offered 70.7 million new shares and parent
Poly Group - previously controlled by the military - offered 7.1
million shares, making the total sale worth HK$2.57 billion
The HK$33.00 price would therefore be equivalent to a 2014
price-to-earnings ratio of 17.1, IFR said, or 17.1 times the
amount of profit the company could potentially allocate to each
share in 2014.
Poly Culture's shares will be listed on the Hong Kong Stock
Exchange on March 6.
CLSA was sole global coordinator and bookrunner, and stands
to earn underwriting commission of $7.94 million, or 2.4 percent
of the proceeds, according to the IPO prospectus.
The prospectus also showed that Poly Culture was once 32
percent owned by defence contractor Poly Technologies Inc, which
was subjected to U.S. sanctions for conducting business with
Iran, Syria and North Korea.
Poly Culture said its reputation could be affected by the
connection. Still, the number of Poly Culture shares brokerages
sought to sell on to individual investors was more than 600
times the number on offer, while the institutional book was
"heavily oversubscribed," IFR reported.
By comparison, the retail tranche of funeral services
operator Fu Shou Yuan International Group Ltd was
oversubscribed by more than 681 times, cooking wine maker
Honworld Group Ltd by 1,045 times, and night club
owner Magnum Entertainment Group Holdings Ltd by 3,500
Poly Culture is known primarily for being an auction house
for art, but it also operates 31 theatres and 17 cinemas, and
has an agreement to lease another 25 cinemas, according to the
The company earned net profit of 308.2 million yuan ($50.29
million) in the 10 months ended Oct. 31 compared with 316.7
million yuan in the same period a year earlier, on revenue of
which rose 17.7 percent to 1.46 billion yuan.
Poly Culture brings in about 44 percent of revenue from
auctioning art, 40 from managing theatres and 16 percent from
The company plans to use half of the IPO proceeds to expand
the art side of its business by, among other means, opening
About 40 percent of the proceeds will go toward its theatre
and cinema businesses.
($1 = 7.7601 Hong Kong dollars)
($1 = 6.1284 Chinese yuan)
(Reporting by Fiona Lau of IFR and Elzio Barreto; Editing by