Want Want China Holdings Ltd (
Shanghai-based Want Want and its owners are offering 2.7 billion shares at HK$3 each, the lowest of a HK$3 to HK$4.10 price range, a copy of an e-mailed term sheet sent to investors showed.
The company, which withdrew from the Singapore stock exchange last year, is moving its listing to Hong Kong, where Chinese companies command higher valuations. Hong Kong's Hang Seng Index has lost 12.3 percent this month and hit a seven-month low yesterday after the US Federal Reserve cut its discount interest rate at an emergency meeting and JPMorgan Chase & Co agreed to buy Bear Stearns Cos.
"In the current climate I would be surprised if they don't lower it further or scrap it totally," Andrew Clarke, a sales trader at SG Securities Hong Kong Ltd, said in an interview yesterday. "It's no surprise"
Want Want set the price at the bottom of its marketed range.
Its owners are offering 2.32 billion shares while the company will sell an additional 397 million new shares, the term sheet sent by e-mail to investors by one of the sale's arrangers, a copy of which was obtained by Bloomberg News, showed.
The shares being sold represent 20.5 percent of the company's capital after being enlarged by the sale, the term sheet said. The initial public offering may be boosted 15 percent, or 407.7 million shares, to meet demand, it said.
Selling the shares at HK$3 each would value Want Want at US$5.1 billion, or 20.3 times this year's estimated profit, a sale document said earlier this month. The stock's ratio was in the low to mid teens in Singapore a year ago, data compiled by Bloomberg showed.
Want Want's share sale comes after more than 60 companies canceled or delayed IPOs worldwide this year, data compiled by Bloomberg showed, as concerns about a global economic recession dent demand for new stocks.
Maoye International Holdings Ltd (茂業國際控股公司) in January scrapped what could have been the largest Hong Kong IPO of a Chinese department store chain, as signs of rising Chinese consumer demand failed to shield it from weakening investor sentiment.
Want Want's profit grew 45 percent to US$124.2 million in the nine months ended September, while sales rose 27 percent to HK$765.5 million (US$99 million).
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