China's Sany Heavy pulls $3.3 billion share sale on market slump

China's Sany Heavy Industry Co Ltd has postponed its up to $3.3 billion Hong Kong share offering due to tumbling global markets, three sources with direct knowledge of the decision said on Thursday. The company, China's largest construction machinery maker, has set no new dates for the deal, said the sources, who couldn't be named because the decision isn't public.
Sany Heavy's deal would have been Hong Kong's second-largest offering this year. Hong Kong's benchmark Hang Seng Index tumbled nearly 5 percent on Thursday amid concern about Europe's debt crisis and the US economy. The index has retreated 11.4 percent since Sany Heavy and its underwriters began meeting with investors to drum up demand for the deal on September 5, while Sany Heavy's Shanghai-listed stock has declined 5.4 percent over the same period.
"There's not much you can do with a market like this," said a source with direct knowledge of Sany Heavy's listing plans. Calls to Sany Heavy's external public relations firm in Hong Kong were not immediately returned. Sany Heavy, controlled by China's richest man, Liang Wengen, will continue meeting investors in the United States and London next week, said one source. It might go forward with the deal on an accelerated basis once it decides to resume the sale, since it already held extensive meetings with investors, the source added.
Xiao Nan Guo Restaurants Holdings said late on Wednesday it had decided not to proceed with its planned Hong Kong offering of up to $95 million because of "excessive market volatility". The Sany Heavy sale would have been the biggest since commodities trader Glencore raised nearly $10 billion in a dual listing in Hong Kong and London in May and topped a $2.5 billion initial public offering by luxury goods maker Prada in June.
Sany Heavy was offering 1.34 billion shares at HK$16.13-19.38 each, putting the total offer value at up to HK$25.97 billion ($3.3 billion), according to a term sheet seen by Reuters earlier this week. The company, often referred to as China's Caterpillar, and rival XCMG Construction Machinery have benefited from China's construction boom over the past several years.
Sany Heavy, which has a market value of nearly $19 billion, had planned to price the offer around September 26 and start trading in Hong Kong on or around October 3. The company had already delayed the retail portion of the offering on Tuesday. Bank of America Merrill Lynch, Citic Securities Co Ltd and Citigroup Inc were tapped as joint global co-ordinators to manage the offering.