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Hongqiao Plans US$1 Bln Relaunched HK IPO

Thursday, Mar 10, 2011

Aluminum producer China Hongqiao Group Ltd., which scrapped a plan to raise up to US$2.2 billion in an initial public offering in January, is now planning to raise US$1 billion from a relaunched IPO later this month in Hong Kong, a person familiar with the situation said on Thursday.

Hongqiao, which in January said it scrapped its IPO due to deteriorating markets, aims to start pre-marketing next week and start trading shares on the Hong Kong stock exchange before the end of March, the person said. The company had originally planned to sell 1.74 billion shares in an indicative price range of 7.10 Hong Kong dollars (US$0.91) to 9.90 Hong Kong dollars each, according to the company's listing prospectus released in January.

Hongqiao is the fourth company after Australian miner Resourcehouse Ltd., Newton Resources Ltd., and Russian electricity producer EuroSibEnergo that has been planning a revived deal in a market that should see more than US$20 billion in IPOs in the next six months, with Glencore International AG's planned Hong Kong-London IPO raising as much as US$10 billion among the year's biggest.

Hong Kong's stock market has risen 2.7% so far this year and 2.1% in the past month, but it has underperformed U.S. markets, which have benefited from fund inflows leaving emerging markets. The Dow Jones Industrial Average is up 5.5% in 2011 so far.

The relaunched deals are in different stages of their marketing process. Resourcehouse is currently in the pre-marketing stage for its US$3 billion IPO, while Newton Resources Ltd., which shelved its plan to raise up to US$522 million in May and was rejected in its February application by Hong Kong stock exchange's listing committee, is planning to file a new listing application, people familiar with the situation have said.

EuroSibEnergo had been planning to relaunch its US$1 billion IPO last month, but then decided to hold off pre-marketing, as it is locking in potential cornerstone investors from the Middle East and China.

Huaneng Renewables Corp., the wind-power unit of China Huaneng Group, may come to the market sometime this year after scrapping plans in December to raise up to US$1.28 billion in a Hong Kong IPO, though there is no timetable for a deal yet.

The relaunched deals and other new offerings are coming to a market that has been quiet so far this year, weighed down by concerns about the Middle East and inflation.

Only nine Hong Kong IPOs had raised a total of US$314 million as of Thursday, compared with a total of US$3.60 billion worth raised on the Hong Kong stock exchange's main board and Growth Enterprise Market in the same period in 2010, according to data provider Dealogic. J.P. Morgan Chase & Co., Barclays Capital, BNP Paribas SA, Bocom International and ICBC International Holdings Ltd. are handling Hongqiao's IPO.

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