China Hongqiao Seeks Up to $2.2 Billion in Hong Kong IPO to Double Output

Bloomberg Jan 24--China Hongqiao Group Ltd., the country’s largest privately-owned aluminum producer, is seeking as much as HK$17.2 billion （$2.2 billion） in a Hong Kong initial offering on Feb. 11 to help it double capacity by next year.

Hongqiao, which mainly produces molten aluminum alloys, is selling 1.74 billion shares at HK$7.10 to HK$9.90 apiece, according to the terms of the sale. JPMorgan Chase & Co., Barclays Capital, BNP Paribas, BOCOM International and ICBC International are managing the transaction.

The Shandong-based company joins United Co. Rusal, the world’s biggest aluminum producer, and Aluminum Corp. of China Ltd., the nation’s largest producer of the metal, in tapping Hong Kong investors keen to buy into rising demand for the metal. Initial public offerings there may raise as much as HK$350 billion this year, according to PricewaterhouseCoopers LLP.

“As an integrated aluminum producer, Hongqiao competes directly with Chalco. Its advantage lies in aluminum processing.” said Helen Lau, a Hong Kong-based analyst at UOB- Kay Hian Ltd. “We are positive on aluminum demand and prices this year.”

Hongqiao, whose customers are makers of window frames, doors and speed train components, will use the capital to double capacity by 2012, according to its prospectus.

Rival Chalco returned to a profit in 2010 after aluminum prices recovered, the Beijing-based company said Jan. 17. Global aluminum demand may rise 8 percent this year, with demand from China likely growing 12 percent, Rusal said on Jan. 18.

Molten aluminum alloy comprises the metal melted with small elements of others and is used for fabricating aluminum products. It can be directly transported to manufacturing sites for further processing, without any need for molding or re-smelting, according to Beijing Antaike Information Development Co.

Hongqiao is controlled by Shandong Weiqiao Pioneering Group, whose business includes textiles, thermal power and aluminum. The group is owned by Zhang Shiping and his family. A call to Weiqiao’s securities department was redirected to the company’s public relations agency, Porda International （Finance） PR Group in Hong Kong. A call to Porda was not answered.