CDB Leasing IPO at low end and with significant state backing

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By admin July 1, 2016 09:23

CDB Leasing IPO at low end and with significant state backing

All is wonderful on the face of things but behind closed doors one cannot help thinking that without state backing, it may not have been a good turnout for the China Development Bank Financial Leasing (CDB Leasing) initial public offering (IPO). The leasing company raised $799 million after pricing its Hong Kong IPO near the low end of the marketed range. The lessor sold 3.1 billion shares at HK$2 each. The shares were offered at HK$1.90 to HK$2.45 each.

State-owned power generator China Three Gorges agreed to purchase about 42% of CDB Leasing’s IPO shares as a cornerstone investor, committing to hold its stock for six months in exchange for early, guaranteed allocation. The investment sets a record for the highest proportion allocated to a single cornerstone buyer in any major listing in Hong Kong.

Bank of America, Citic CLSA Capital Markets, Deutsche Bank, HSBC and UBS were joint global coordinators of the CDB Leasing offering. Shares will start trading on the July 11.
In all, CDB allotted a record 85% of the deal to cornerstone investors. As such it is hard to say what the share prices will do once they start trading – in effect there is no true market pricing on CDB Leasing while it is closely held by these large state companies for at least six months. Deutsche Bank managed to sell just $120m of shares over and above the cornerstone investors.

More and more Hong Kong listings are going off with cornerstone investors with the average now at 41% for IPOs over the past 12 months.

admin
By admin July 1, 2016 09:23