Asia's largest wind power generator, Longyuan Power Group Corp, and China's biggest shipbuilder, China Shipping Industry, will each raise over $2 billion in initial public offerings in Hong Kong and Shanghai, testing market appetite strained by a glut of recent listings.
Chinese companies, from banks to property developers and travel agents, have rushed to list this year in Hong Kong and Shanghai, to gain from rallying markets swollen with liquidity.
Longyuan raised $2.2 billion in the world's 8th-largest public offering when it priced its Hong Kong IPO at the top of an indicated range, sources familiar with the deal said on Friday.
The IPO has attracted the interest of China's sovereign wealth fund, China Investment Corp (CIC), U.S. billionaire investor Wilbur Ross and China Life Insurance Group, all of whom bought in ahead of the IPO. It appeals to investors hungry to tap into the fast-growth renewable energy sector.
China Shipping also said it would raise up to $2.16 billion in an A-share listing, issuing up to 2 billion shares priced between 6.15 yuan and 7.38 yuan.
China Shipping is drawing strong investor interest and is expected to price at the high-end of the range, or around 7 yuan, analysts said, boosted by market expectations of government help in the future for the shipping industry.
There is a lot interest in this company, because their financial backers are very strong, said Su Ming Le, analyst at Bank of China International Securities.
Another analyst, who declined to be named, said China Shipping's military and energy equipment business is expected to grow substantially.
China Shipping said it needed $937 million to expand production capacity, and appointed China International Capital Corp as the offer's lead underwriter.
IPO's in Asia have dominated world rankings this year, accounting for more than two-thirds of the $42 billion proceeds in the top-10 offerings worldwide.
However, some recent listings such as casino play Sands China, have performed weakly, hit by rich valuations and market volatility over Dubai's debt problems.
Still a company like Longyuan, the fifth-largest wind power generator in the world, and a major subsidiary of China Guodian Corporation, would hold its appeal, analysts said.
Longyuan has its unique position as it is the largest wind power generator in China and is supported by government policy, said Antonny Cheng, managing director at Gain Asset Management.
Shares in Hong Kong-listed smaller wind power generator China Windpower and CP New Energy have soared 369 percent and 188 percent this year, respectively. Longyuan had a 24 percent share of China's wind power market in terms of total installed capacity as of end-2008.
China aims to boost wind-generated power to 100 GW by 2020 with investments possibly worth over $150 billion, which will likely make it the world leader in wind energy.
Longyuan sold 2.1 billion shares, or 30 percent of its enlarged share capital, at HK$8.16 each, compared with a range of HK$6.26 to HK$8.16, the source said.
Its listing will grow to $2.6 billion if it exercises in full an overallotment option, as is expected. Longyuan's offer price represents a multiple of about 22 times to 28.9 times forecast 2010 earnings.
By comparison, global wind peer Spain's Iberdrola Renovables trades at 27.2 times 2010 forecast earnings, and EDP Renovaveis trades at 30 times, according to UBS research.
Longyuan's trading debut is set for Dec. 10, under the symbol 916, while China Shipping has not set a trading date.