Shenhua Draws Record Orders for Shanghai Share Sale
By Bei Hu and Winnie Zhu
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Sept. 26 (Bloomberg) -- China Shenhua Energy Co., the nation's largest coal producer, attracted at least 2.6 trillion yuan ($350 billion) of orders for its Shanghai share sale, a record, said two people with direct knowledge of the transaction.
The offer drew over 1.9 trillion yuan from retail investors and more than 700 billion yuan from institutions, the people said, citing preliminary tallies and asking not to be identified before an official announcement. Beijing-based Shenhua sold 1.8 billion shares at 36.99 yuan each, it said in a statement today.
Shenhua will use the proceeds to fund acquisitions and expand output as domestic suppliers fail to keep pace with demand, forcing the nation to rely on imports for the first time. Chinese investors, undeterred by the world's highest valuations for traded companies, are rushing to buy into a stock market that has almost tripled in size this year.
``Shenhua has a very good market image and there is no risk to invest in the company as it can sustain stable growth,'' said Yan Shi, a Shanghai-based analyst at Core Pacific-Yamaichi International Ltd. ``It's a good choice for long-term investment.''
China became a net coal importer for the first time in January, ending centuries of self-sufficiency and boosting benchmark prices of the fuel at Australia's Newcastle Port to records last month.
Largest Domestic Offering?
Shenhua's share sale, if priced at the top end of the range, will become China's largest domestic stock offering, overtaking China Construction Bank Corp.'s 58 billion yuan sale earlier this month, according to data compiled by Bloomberg.
China Galaxy Securities Co. and China International Capital Corp. are arranging the sale. The coal supplier received more orders than the 2.26 trillion yuan drawn by China Construction Bank, whose stock rose 32 percent on its Shanghai debut yesterday.
Huang Qing, spokesman for Shenhua in Beijing, Song Nuan, a Beijing-based spokeswoman for Galaxy, and Tracy Hu, spokeswoman for CICC in Beijing, declined to comment.
Prices of coal rose to a record last month at Qinhuangdao, China's largest port for the fuel, as hot weather increased air- conditioner use. Power companies burn the fuel to generate 78 percent of the electricity produced in China, the largest miner and consumer of coal.
China's ``insatiable demand'' for coal from power plants, steelmakers, fertilizer producers and cement manufacturers has increased by as much as 19 percent this year while supply growth is ``flat,'' Core Pacific-Yamaichi analyst Yan Shi said in a report Sept. 19.
Institutional Demand
Demand from retail investors for Shenhua's stock broke the 1.7 trillion yuan record set by this month's 6.7 billion-yuan Shanghai share sale for China Oilfield Services Ltd., the people said. Institutional orders exceeded the 614 billion yuan for Construction Bank stock, they said.
Shenhua, listed in Hong Kong since October 2005, raised 66.6 billion yuan in the world's biggest share sale this year.
Shenhua shares have more than doubled in Hong Kong since Jan. 1, outpacing the 32 percent gain in the benchmark Hang Seng index and making it the third-best performer this year among the 40 members of the MSCI AC Asia Pacific Energy Index.
The transaction may top that of VTB Group, Russia's second- biggest bank, which raised $8 billion in May in the world's largest share sale this year.
China's benchmark interbank lending rate rose to a four- year high as demand for Shenhua's sale and other stock offerings squeezed the supply of funds. The seven-day repo rate was fixed at 7.03 percent, the highest since March 2003, and has climbed about 3 percentage points in the past month. |
