Metallurgical Corp of China Ltd plans to raise as much as $5.3 billion in its initial public offering (IPO) in Shanghai and Hong Kong, making the biggest IPO in 18 months in Hong Kong and the second biggest IPO on the Chinese mainland this year.
The company will sell as much as 3.5 billion yuan-denominated A shares at between five yuan ($0.73) and 5.42 yuan, it said in a statement to the Shanghai Stock Exchange late Monday. The A-share sales will help the company raise as much as 18.97 billion yuan.
A total of 2.1 billion shares will be subscribed in an online tranche for retail and institutional investors on Wednesday and 1.4 billion shares were issued offline for institutional investors from Tuesday, the statement said.
The price at the trading debut should range between 6.1 yuan and 7.4 yuan, equivalent to 24.4 and 29.6 times earnings per share, said Guotai Junan Securities Co.
The company will also sell as much as 2.87 billion shares in Hong Kong to raise HK$19.6 billion($2.5 billion), the biggest IPO in 18 months in Hong Kong, at between HK$6.16 and HK$6.81 apiece.
The pricing is not cheap, if you compare it with other IPOs by commodity companies this year, such as China Zhongwang Holding Ltd, said Helen Wang, analyst with DBS Vickers Hong Kong Ltd.
The price range represents 16.4 times to 18.1 times Metallurgical's 2010 profit as estimated by banks arranging the sale, according to a document sent to fund managers that was obtained by Bloomberg News. China International Capital Corp, CITIC Securities Co, Citigroup Inc and Morgan Stanley are managing the offering.
Metallurgical may expand the Hong Kong sale by 15 percent to meet excess demand. The builder started taking bids from institutional investors yesterday and the shares will be priced on Sept 18. They will start trading Sept 24.
The state-owned firm will use the proceeds from the dual listing to fund international projects, repay bank loans and acquire overseas mining resources.