China Hainan Rubber Industry priced its Shanghai IPO at the top end of an indicative range, raising $709 million in what could be a harbinger of a steady deal flow next year in China, the world's top market for IPOs.
Global IPOs have hit a record this year with companies expected to have raised more than $300 billion in IPO proceeds, according to corporate advisory company Ernst & Young.
Issuers in the mainland, Hong Kong, Macao and Taiwan made up more than 46 percent of global IPOs in terms of IPO proceeds, raising $117.9 billion in 442 deals in the first 11 months of 2010, said Ernst & Young. Hainan Rubber, a leading Chinese rubber producer based in the southern island province of Hainan, set the offer price for its IPO at 5.99 yuan ($0.90) a share, the company said in a statement published on Thursday.
Companies of modest size such as Hainan Rubber are expected to make up the majority of new IPOs coming to the market in 2011, said Zhang Ying, an analyst with Industrial Securities in Shanghai.
Wind turbine producer Sinovel Wind said it had started pre-marketing for its Shanghai IPO, which could raise as much as $519 million, and said it would price the IPO by Jan 7.
Though many cash-hungry companies – especially insurers, regional banks and securities firms – are expected to tap the stock market for capital, it's uncertain how soon these IPOs will materialize, analysts said.
"It's hard to predict the momentum of these new listings. A lot depends on the performance of the secondary market," said Zhang. "If the stock market does well, then we think the outlook for the IPO market should be relatively good," she said.
Among insurance companies, New China Life, in which Zurich Financial owns a stake, and the People's Insurance Company of China, the country's top non-life insurer, are expected to be aiming for an IPO next year.
Chinese stock markets, among the world's weakest in 2010, have been under pressure from Beijing's intensified tightening measures to combat consumer inflation and high property prices.
The benchmark Shanghai Composite Index has fallen 16 percent this year. MSCI's broadest index of Asia-Pacific shares outside Japan was up 13 percent.
Among the regional banks, Bank of Shanghai and Bank of Hangzhou are among city-focused lenders that have outlined their IPO plans.
China was the host to the world's biggest IPO at the time when Agricultural Bank of China raised $22.1 billion in Shanghai and Hong Kong in July. It was later overtaken in the top spot by General Motors' record $23.1 billion IPO in New York and Toronto.
Hainan Rubber said its IPO proceeds would be spent on expanding its rubber production, upgrading technology and supplementing working capital.
The company has not yet set its listing date, saying it would list as soon as possible following the final pricing. Citic Securities is the underwriter for the Hainan Rubber IPO.
SOURCE: China Daily


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