Chinese iron ore miner Lung Ming, partly owned by private equity firm Hopu and Singapore's state investor Temasek, plans to list shares in Hong Kong this year to raise up to $1 billion, sources with direct knowledge of the plan said.
If successful, Lung Ming's IPO would be the first investment exit for Hopu, an influential China-focused private equity firm run by top dealmaker Fang Fenglei, who helped Goldman Sachs set up its China investment banking joint venture.
Amid a recovery in global markets, companies are rushing to raise equity after a roughly year-long drought of IPOs. Private equity firms, for their part, see the IPO recovery as a way to cash out of existing investments and pocket the profits.
Last week, China Pacific Insurance (Group) Co Ltd, the country's third-largest life insurer and partly owned by the Carlyle Group, said it was relaunching its Hong Kong IPO, likely to raise $3.5 billion.
Lung Ming, which owns and operates a Mongolian iron ore mine, aimed to raise between $500 million and $1 billion and an initial public offering of shares was likely to take place in the fourth quarter, said the sources who declined to be identified as the IPO process is confidential.
A representative for Lung Ming could not be immediately reached for comment.
Lung Ming was Hopu's first investment since its fund was launched and now it is going to be the first exit case for Hopu, so this will attract lots of eyeballs, said one source.
Fang established Hopu in 2007 and completed raising its first $2.5 billion China-focused fund in 2008. Hopu's main investors include Singapore's sovereign fund Temasek and Goldman Sachs.
Shortly after Hopu Investment Management raised its first fund in early 2008, Hopu teamed up with Temasek Holdings to jointly invest US$300 million in Lung Ming, the sources said.
MONGOLIAN IRON ORE
As the fastest growing major economy, China is the world's largest iron ore buyer and consumes more than half of its traded ore.
China's annual term iron ore price negotiations have this year degenerated into an international row, with China alleging that Rio Tinto employees were involved in spying and bribing Chinese officials.
Beijing is seeking alternatives to rely less on imports of natural resources. Chinese companies and funds are encouraged by the government to acquire resource assets worldwide.
Lung Ming owns 53 percent of Mongolian iron ore mine Eruu Gol. Local partner Dornyn Gobi holds the remaining 47 percent, local media reported.
Besides Hopu and Temasek, early investors in Lung Ming include U.S. private equity firm Clarity Partners and Credit Suisse, which bought some convertible bonds of Lung Ming in late 2007, according to local media reports.
Last June, Lung Ming hired Morgan Stanley and Credit Suisse to advise on its Hong Kong IPO, according to local media reports at the time, but the plan did not work out because of the worsening global financial crisis.
Investment banks, including UBS and Morgan Stanley, were pitching Lung Ming to advise on its new IPO plan, although no appointments had so far been made, said the sources.
(Additional reporting by Joseph Chaney; Editing by Jacqueline Wong and Chris Lewis)