* Unusual fixed-price sale made deal simpler, faster-source
* Sales comes after large IPOs pulled amid weak demand
* Company to use funds for port expansion for commodities
(Adds source comments, details of IPO, underwriters)
By Elzio Barreto
HONG KONG, May 30 A Chinese port services firm
has completed a rare fixed-price initial public offering of
shares in Hong Kong in an accelerated, pragmatic sale skirting
the market jitters that derailed more ambitious regional
listings in the last few weeks.
Qingdao Port International Co and its controlling
shareholder raised a combined HK$2.92 billion ($377 million) in
the sale, sources with direct knowledge of the deal said on
Friday. Priced at HK$3.76 each, the share sale raises funds to
expand facilities at Qingdao port in eastern China, the world's
seventh busiest by shipping volume.
The company and its bankers chose the fixed-price strategy
as it "made it more efficient, simpler" and faster to execute,
one of the sources said. The sources, who weren't authorized to
speak publicly on the matter, said they expect fixed-price deals
to remain the exception as markets gradually stabilize.
Weak demand and unfavorable market conditions saw Chinese
pork producer WH Group Ltd. pull a Hong Kong IPO late
in April that once targeted up to $5.3 billion in proceeds,
while Lotte Shopping Co Ltd postponed an up to $1
billion Singapore real estate investment trust listing three
"It's still a tough market. The problem is, apart from
anything else, investors haven't made a lot of money in recent
IPOs, so not a huge incentive for people to be too aggressive,"
a separate source said. "You have to be very careful and very
The Qingdao deal closed after just three and a half days of
bookbuilding, according to the sources, rather than the typical
two weeks for most IPOs, when management and underwriters travel
around the world to gauge demand at different price levels for
Qingdao Port International is the primary operator of the
port of Qingdao. It handles about 76 percent of the port's total
cargo, according to the company's IPO prospectus.
The company plans to use 90 percent of the proceeds to
invest in new storage facilities for commodities such as oil and
iron ore, as well as the construction of two crude oil berths,
two general berths and two liquid chemical berths.
BOC International, Citic Securities International and UBS AG
were joint sponsors of the IPO and will share the $6 million in
CLSA and Deutsche Bank also acted as joint bookrunners with
the sponsors, with the group of banks standing to earn a
combined $6.5 million, equivalent to a 1.72 percent underwriting
commission, according to the IPO prospectus.
($1 = 7.7532 Hong Kong Dollars)
(Reporting by Elzio Barreto; Editing by Kenneth Maxwell)