By Yvonne Lee And Prudence Ho
HONG KONG—Aluminum producer China Hongqiao Group /zigman2/quotes/207358542/delayed HK:1378 -2.48% Ltd., plans to raise around US$1 billion in a second effort at an initial public offering in Hong Kong this month, a person familiar with the deal said Thursday, as it moves to seek funds before regulatory approval expires.
Hongqiao scrapped a plan to raise as much as US$2.2 billion in an IPO in January, blaming deteriorating markets.
It had received approval to list in Hong Kong based on its audited results for the nine months ended Sept. 30, but stock-exchange rules say that the accounts can't be from more than six months before the first day an IPO is offered to retail investors. In Hongqiao's case, that means the end of March is the latest it can start selling shares to Hong Kong retail investors.
Hongqiao now aims to start informal conversations next week aimed at gauging investor interest. It wants to have trading in its shares on the Hong Kong stock exchange begin before the end of March, the person said.
The company had originally planned to sell 1.74 billion shares for between 7.10 and 9.90 Hong Kong dollars (91 U.S. cents and US$1.27) each, according to a prospectus the company released in January. A new price range hasn't been announced.
Hongqiao follows Australian miner Resourcehouse Ltd., Chinese iron-ore miner Newton Resources Ltd., and Russian electricity producer EuroSibEnergo in seeking to revive deals in Hong Kong.
More than US$20 billion in Hong Kong IPOs are expected in the next six months. Glencore International AG's plan for a Hong Kong-London offering that could raise as much as US$10 billion is expected to be among the year's biggest.
The relaunched deals are in different stages. Resourcehouse is holding informal talks with potential investors for an IPO it hopes will raise US$3 billion. Newton Resources, which shelved a plan to raise up to US$522 million in May and had a February application rejected by the Hong Kong exchange, plans to file a new listingapplication, people familiar with the situation have said.
EuroSibEnergo had been planning to relaunch its US$1 billion IPO last month, but decided to hold off to lock in potential cornerstone investors from the Middle East and China, other people familiar with the dealsaid.
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 as much as US$1.28 billion in a Hong Kong IPO, people familiar with the deal have said. There is no timetable for a deal.
Separately, Far East Horizon Ltd., a financial-leasing unit of state-owned Sinochem Group, received regulatory approval Thursday for its plan to launch an approximately US$600 million IPO in Hong Kong, a person familiar with the situation said.
Far East Horizon's institutional shareholders include Kohlberg Kravis Roberts /zigman2/quotes/206126495/composite KKR -1.29% & Co., GIC Special Investments Pte. Ltd. and China International Capital Corp., according to the company's website.
The offerings are coming to a market that has been quiet so far this year. Activity has been constrained by concern about the Middle East and inflation.
As of Thursday, nine Hong Kong IPOs had raised a total of US$314 million so far this year, far less than the US$3.60 billion 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.
The Hong Kong stock market, while up this year, has lagged behind U.S. markets, which have benefited as investors put to work cash that has been pulled out of emerging markets.
J.P. Morgan Chase & Co.; Barclays Capital, part of Barclays PLC; BNP Paribas SA; Bank of Communications International, a unit of China's Bank of Communications Co.; and ICBC International Holdings Ltd. are handling the Hongqiao IPO, another person familiar with the situation said.
China International Capital Corp., HSBC Holdings PLC, Morgan Stanley and UBS AG are handling the Far East Horizon deal, another person said.