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China Railway Construction Cuts IPO Size
2008-02-25
SHANGHAI, China (AP) -- Major contractor China Railway Construction has cut the size of its initial public offering in Shanghai amid signs a slew of new shares entering the market is overwhelming investor demand.The Beijing-based company, in an announcement carried by state newspapers Monday, cited a reduced need for funds as the reason for its decision to cut the Shanghai segment of its IPO to 2.45 billion shares from the originally planned 2.8 billion shares. But the market's recent bearishness is prompting some companies to rethink share offering plans. "The company cut the size of its domestic IPO because of the recent fluctuation in the stock market and the negative impact of a slew of fundraising activities on the bourses," Liu Kebin, an executive at Citic Securities, told investors during a road show for China Railway Construction. The company set a price range of 8 yuan to 9.08 yuan ($1.12-$1.26), expecting to raise up to 22.25 billion yuan ($3.1 billion) from the Shanghai share offering. The shares are due to begin trading in Shanghai on March 10, just days before the company launches an IPO of 1.7 billion shares on the Hong Kong Stock Exchange. The benchmark Shanghai Composite Index has fallen in recent months. It slumped 4.1 percent to a seven-month low on Monday. Share prices have faltered recently following announcements of plans for major share offerings at a time when the supply of shares appears to be outstripping demand. Some 400 billion yuan ($56 billion) worth of shares held by strategic investors and large shareholders will become tradable in March, when a series of IPO- or share reform-related lockup periods expire, according to state media reports. Major insurer Ping An Insurance, whose shares are traded in Hong Kong and Shanghai, has announced plans to raise up to $22 billion for acquisitions by selling new shares and bonds on Chinese markets. Shanghai-listed Shanghai Pudong Development Bank, a mid-sized lender, has also said it is considering raising funds through an additional share sale. China Railway Construction, the state-owned company responsible for building more than half the country's modern railways, is selling shares equivalent to nearly one-quarter of its outstanding capital. The company has also built such showcases as the Qinghai-Tibet Railway, the first rail link to the Himalayan region, Shanghai's ultra-fast magnetic levitation line and railway linking Beijing with Hong Kong. The company began taking subscriptions from institutional investors for the share offering on Monday. Retail subscriptions were to begin Tuesday. The company's assets totaled 155 billion yuan ($21.7 billion) by the end of November, according to the official Xinhua News Agency.
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