Zoomlion--Zoomlion Raises $1.68 Billion Ahead of Listing

HONG KONG—Machinery maker Changsha Zoomlion Heavy Industry Science & Technology Development Co. raised $1.68 billion ahead of its Hong Kong initial public offering after pricing its shares toward the bottom of the indicative range, a person familiar with the situation said Friday.

Despite the low-end pricing, Zoomlion's float is the third-biggest IPO this quarter in Hong Kong after the $20.5 billion deal by AIA Group Ltd. in October and the $1.8 billion IPO by Chinese shipbuilder China Rongsheng Heavy Industries Group Holdings Ltd. last month. Zoomlion's IPO will raise $1.929 billion if an overallotment option amounting to 15% of the deal size is exercised.

The Shenzhen Stock Exchange-listed maker of machinery for construction, energy and transportation projects sold 869.58 million shares at HK$14.98 (US$1.93) each, the person said. The indicative price range for Zoomlion's IPO as HK$13.98-HK$18.98 a share, according to the company's prospectus.

Zoomlion's offer price represents a 13.6% discount to the company's closing price in Shenzhen on Friday of HK$17.34.

Zoomlion's pricing comes at a time when investors are increasingly wary of buying into IPOs following a decline in market sentiment amid a spate of canceled deals, and year-end closing of books by fund managers. It also comes as China Datang Corp. Renewable Power Co., a unit of state-owned power generator China Datang Corp., fell 6% on its Hong Kong debut Friday, a reflection of the lack of connections by its wind farms to the grid network in China.

"Both Datang's installations and its pipeline are concentrated in Inner Mongolia, where the grid network is struggling to absorb more solar power. This translates to lower utilization rates, tariffs and returns for Datang compared to Longyuan," said in a CLSA's report dated Dec. 9.

Datang Renewable's weak trading debut is unlikely to bode well for rival Huaneng Renewables Corp., which scrapped its $1.28 billion IPO last week, and is planning to relaunch the deal in the first quarter, next year, analysts said.

Datang Renewable, China's second-largest wind-farm operator by capacity, raised $642 million in its Hong Kong IPO after pricing its shares at the bottom of a range of HK$2.33-HK$3.18.

China Longyuan Power Group Corp., which raised $2.6 billion from an IPO in December 2009, is China's largest wind farm operator by capacity, followed by Huaneng Renewables, which is the third-largest.

Guangdong province-based baby-care products company Biostime International Holdings Ltd., which raised $212 million in its Hong Kong IPO, ended below 5% at HK$10.44 from its offer price HK$11 on its first trading day Friday.

"Given the weakness of markets, investors' appetite for IPOs is weak," said Fulbright Securities' General Manager Francis Lun.

The Hang Seng Index, which closed Friday at 22,715, is down 4.1% in the past month and is 9% below its year-high level of 24964 on Nov. 8.

Zoomlion will start trading on the Hong Kong exchange Thursday, the prospectus said.

J.P. Morgan Chase & Co., China International Capital Corp., and Goldman Sachs Group Inc. are the joint global coordinators on the deal, the prospectus said. (By PRUDENCE HO)

Source: Wall Street Journal