China Shipping Container, sailing against a tide of worsening investor sentiment towards China, will start pre-marketing next week for an IPO to raise up to US$2 billion, sources close to the deal said on Friday.
"The Hong Kong stock exchange has approved the listing. We expect shares of China Shipping Container to start trading before mid-June," the source said. The company is the container shipping arm of state-owned China Shipping (Group) and is the world's 10th-largest container shipper with 110 vessels able to carry 210,000 twenty-foot Equivalent Units (TEUs).
It plans to use the IPO proceeds to buy and build more ships.
China's economy grew at 9.1 percent last year, and heavy exports have led to transport bottlenecks, including a shortage of container shipping capacity.
But with investors dumping China shares on fears of an economic slowdown, market conditions have become much tougher than they were early this year when steel maker China Oriental Group drew such heavy subscriptions for its HK$2.2 billion (US$282 million) IPO that HK$136.5 billion of retail investor funds were locked up.
"Because of China's economic cooling efforts, markets have been falling. That means that new listings must be really high quality and attractively priced. Otherwise, I don't expect strong interest," said Sam Ho, analyst at BEA Securities.
Rattled by fears of interest rate rises in China and the United States, the Hang Seng China Enterprise Index of mainland companies listed in Hong Kong dipped below the 4,000 mark on Friday, hitting a five-month low.
After a spate of spectacular trading debuts late last year, recent Hong Kong newcomers have made first-day losses amid weak sentiment. Shares of Nam Tai Electrical Products, which listed on Wednesday, were nearly nine percent below their IPO price of HK$3.88 on Friday.
Still, other Chinese firms are lining up for listings.
Fast-growing Inner Mongolia-based Mengniu Dairy, which plans to raise US$200 million and has attracted investment from Morgan Stanley, is expected to win Hong Kong stock exchange approval for its IPO early next week, sources said.
And Ping An Insurance, China's second-largest life underwriter, is scheduled for a hearing next Thursday for its US$2 billion IPO plan.
Ping An investors include HSBC Holdings, Goldman Sachs, and Morgan Stanley.
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