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Jinduicheng mulls shifting IPO to Shanghai-sources
2007-07-19
HONG KONG - Jinduicheng Molybdenum Group Co. Ltd., China's largest producer of the molybdenum metal used to toughen alloy steel, is considering shifting its US$1 billion initial public offering from Hong Kong to Shanghai, sources familiar with the matter said on Thursday. A shift would reflect Beijing's preference for state-owned companies to list at home, heeding investors' calls for access to big firms and in an attempt to boost quality on mainland bourses, Reuters reported. "The company is considering whether to list on Shanghai's A-share market, but we haven't received any formal decision yet," one banking source said. Jinduicheng could join other state-owned firms, including Chinese lead and zinc miner Western Mining Co. , which raised about US$816 million in Shanghai in July after it switched its listing from Hong Kong. Market watchers expect more mainland companies will choose to list at home, where equity issuance in Shanghai and Shenzhen hit $20.8 billion in the first half of this year. "The (Shaanxi) provincial government hopes the company will list in Hong Kong, but the China Securities Regulatory Commission has not yet granted approval," another banking source said. A Jinduicheng spokesman declined to comment. Bank of Beijing has been planning a dual Hong Kong and Shanghai listing to raise about $1 billion, but sources said the lender may be coerced into keeping its offering on the mainland. Given Shanghai's robust stock market, where some Chinese firms trade at a large premium to their Hong Kong-listed shares, the company could raise more than its original US$1 billion target set for Hong Kong. To avoid increasing upward pressure on the yuan, Beijing preferred state-owned companies to list domestically rather than raise funds overseas, investment bankers said. China's foreign exchange reserves, the world's largest, swelled to $1.33 trillion by the end of the first half of this year on the back of massive trade flows. Deutsche Bank , Merrill Lynch , ABN Amro and BOC International were appointed as sponsors of Jinduicheng's offering in Hong Kong. With an annual output of about 12,000 tonnes of the hard, silvery-white metallic element, the company is the largest integrated molybdenum producer in Asia and the third-largest in the world, according to Jinduicheng's Web site www.jdcmmc.com. Located in Huaxian, next to the provincial capital of Xi'an, the company has proven reserves of about one billion tonnes, according to its Web site. Its exports accounts for 10 percent of the world market. Its rival, China Molybdenum Co. , which raised US$944 million in a Hong Kong IPO in April, has surged more than two-fold since its debut. (US$1=HK$7.8)
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