Hongqiao to Raise Up to $1.1 Billion in Revived IPO

By Prudence Ho and Yvonne Lee

HONG KONG—Aluminum producer China Hongqiao Group /zigman2/quotes/207358542/delayed HK:1378 +1.51% Ltd. is raising US$1.1 billion from a revived Hong Kong initial public offering, but other IPOs in the city were struggling as a powerful earthquake in Japan added to ongoing jitters sparked by the instability in the Middle East and growing inflation in Asia.

Australian billionaire Clive Palmer 's Resourcehouse Ltd. put on hold plans to launch on Monday a US$3 billion IPO that was recently approved , people familiar with the deals said, while Hong Kong's biggest IPO so far this year—the US$167 million deal by China Kingstone Mining Holdings Ltd.—got priced at a bottom of an indicative range.

In Singapore on Friday, Hutchison Port Holdings Trust set an IPO price that could raise US$6.1 billion in the world's biggest IPO so far in 2011, but a S$1 billion IPO by U.S. private equity group Kohlberg Kravis Roberts & Co. of its precision engineering group MMI Holdings unit won't go ahead because of weak market conditions, another person said Friday.

Hongqiao, which scrapped a plan to raise up to US$2.2 billion in January because of deteriorating market conditions, now plans to sell around 1 billion shares at between HK$7.20 (92 U.S. cents) and HK$8.30 each, the people said. The price this time is cheaper, translating to a 2011 price/earnings multiple of 6.5-7.5 times, based on the bookrunners' earnings forecasts, compared with its sale of 1.74 billion shares in January at a 2011 price/earnings multiple of 9.9-13.6 times.

Hongqiao has already secured US$350 million in cornerstone investments from four investors: developer Cheung Kong /zigman2/quotes/208405501/delayed HK:1 +0.92% (Holding) Ltd.; Chow Tai Fook Nominee Ltd., which is controlled by Hong Kong tycoon Cheng Yu-tung ; Thomas Lau , managing director of shopping mall operator Lifestyle International Holdings Ltd.; and his brother, Joseph Lau Luen-hung , chairman of Chinese Estates. It is selling the deal to the Hong Kong retail public Monday before listing on the Hong Kong stock exchange March 24, the people said.

Resourcehouse, which had received Hong Kong listing approval a few weeks ago, had been gauging investor views for an IPO in Hong Kong and had been planning to launch a roadshow Monday. It's now monitoring the market and will make a decision to launch "at an appropriate time," one person familiar with the deal said Friday.

Resourcehouse previously tested the market and had a premarketing process in late 2009; in the first half of 2010, it considered a Hong Kong IPO. Its listing would have been the latest in a long line of non-Chinese firms such as Prada SpA and Glencore International AG that are planning to raise funds in the city in coming months.

That queue of foreign companies continues to grow, however, with Japan's SBI Holdings /zigman2/quotes/200067066/delayed JP:8473 +0.96% Inc. planning to seek listing approval from the Hong Kong stock exchange Thursday for US$300 million-US$500 IPO, according to another person familiar with the situation Friday. If it gets approval, SBI would be the first Japanese company to list in Hong Kong.

SBI, a Tokyo-based financial-to-property conglomerate, is planning to list in Hong Kong by issuing Hong Kong depositary receipts, and would be the second company after Brazil's Vale SA to use these instruments. Unlike Vale, however, which in December listed by introduction, SBI will raise funds from its listing.

Kingstone, which is based in Sichuan province, China, sold 580 million shares at HK$2.25 each, a person familiar with the deal said Friday. The indicative price range for the offering was HK$2.25-HK$3.35, according to the company's prospectus.

The deal was two times covered on the institutional side, and two times covered by retail investors, a person familiar with the situation said Friday. It starts trading on the Hong Kong stock exchange March 18.

Citigroup /zigman2/quotes/207741460/composite C +0.42% Inc. is the sole global coordinator and bookrunner for the Kingstone deal, the biggest IPO so far this year in Hong Kong. Nine companies have raised a total of US$315 million on the Hong Kong stock exchange's main board and Growth Enterprise Market so far this year.

Activity in Hong Kong's IPO market has begun picking up after a slow start to the year, with nine companies raising a total of just US$315 million from Hong Kong IPOs far this year.

Other than Hongqiao, in the market currently are financial firm Far East Horizon Ltd., which received Hong Kong listing approval Thursday for a US$600 million deal and a US$260 million one by Perth-based lithium concentrate miner Galaxy Resources Ltd., which is in the premarketing stage of the deal. Chinese property developer Top Spring International Holdings Ltd. is currently in roadshows and plans to list March 23, people familiar with the deal said earlier.

During pre-marketing, a company and its bankers gauge investor interest in an IPO and come up with a price range for the deal. The roadshow is the official bookbuilding period when a final price is set.

CCB International (Holdings) Ltd. and Daiwa Securities Capital Markets Co. are handling the SBI Holdings' Hong Kong listing plan, people familiar with the situation said earlier.

SBI Holdings and Dow Jones & Co. operate a joint venture called Wall Street Journal Japan KK, which publishes the Japanese-language version of the online edition of The Wall Street Journal.

Write to Prudence Ho at prudence.ho@dowjones.com and Yvonne Lee at yvonne.lee@wsj.com

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