China`s Zijin Mining launches Shanghai IPO
mining-journal.com
Zijin Mining Group Co Ltd is launching a Shanghai stock IPO this week that could raise US$1.4 billion, a move analysts believe signals Chinese regulators` confidence that the domestic market may stabilise after falling for months.
Zijin, China`s second-largest gold miner, plans to issue as many as 1.5 billion new local currency A shares, or 10.2% of its enlarged share capital, to fund expansion projects that mainly involve mining and processing of gold and copper.
Its initial public offer of shares will be the first major issue since US$3.1 billion was raised in a mainland issue by China Railway Construction in the second half of February.
"It appears that regulators believe the market`s recent volatility is basically over, and that it`s the right time to allow major companies to proceed with their share offers," said senior stock analyst Chen Jinren at Huatai Securities in Nanjing.
"The market`s positive response today may justify their judgement," he said, referring to a 4.45% jump in the benchmark Shanghai stock index on Monday.
The index has dropped 41% since its all-time peak hit in October and is down 32% so far this year.
Chen said he expected China`s IPO market to revive this month, with more companies joining the pipeline in addition to the five firms which have already announced IPO plans for the month.
Zijin will start consulting investors about pricing the offer on Tuesday, and take subscriptions on April 15 and 16. Money will be returned to unsuccessful applicants on April 18 and 21, the company said in a share issue prospectus.
Thirty percent of the shares on offer will be earmarked for institutions and the rest for retail investors. The ratio may be shifted in favour of the retail tranche if demand proves strong. Based on the HK$7.17 closing price of its Hong Kong-listed H shares on Thursday, Zijin could raise up to HK$10.8 billion (US$1.4 billion) in the A-share offer.
"Zijin has the best assets and management among Chinese gold producers," said industry analyst Lin Haoxiang at Guotai Junan Securities in Shanghai. "We expect the market to welcome its offer and it should have little difficulty in setting its A share IPO price at the top if it desires." Industry analysts said Zijin would also be supported by expectations of a sustained domestic short supply of gold.
Zijin said it would invest Yu4.92 billion (US$702 million) of the IPO proceeds in expansion projects, including overseas acquisitions in Britain and Tajikistan, and further proceeds would go towards repaying bank loans or serve as working capital.
Zijin obtained initial approval for the Shanghai IPO from the China Securities Regulatory Commission late last year, but the launch was delayed by technical difficulties and the stock market`s slump, a source familiar with the offer told Reuters.
Zijin said it aimed to list in Shanghai "as soon as possible" after completion of the IPO, without giving a specific date.
(Reuters, April 7) |
