TWO RELATED IPOS PLANNED FOR 2011 IN HONG KONG

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By TESTCustomwebLP TESTCustomwebLP November 23, 2010 21:27

TWO RELATED IPOS PLANNED FOR 2011 IN HONG KONG

In a move that proves the comeback of aviation in China, Grand China Airlines, parent of China’s fourth-biggest carrier Hainan Airlines along with China Xinhua Airlines, Shanxi Airlines and Changan Airlines, plans to raise more than HK$10 billion in the first half of 2011 through IPO.

Meanwhile in a related move Hong Kong Airlines, which is controlled by Hainan Airlines, is busy appointing underwriters for a planned HK$5 billion IPO in the third quarter of 2011. Hong Kong Airlines plans to use its IPO proceeds to fund the recent orders for aircraft 33 Airbus aircraft.

The application for Hong Kong Airlines to list is noted as being a “red chip”, or overseas registered Chinese company, and it is known that this has been approved by the State Council.

You may recall that Grand China called off a share sale plan two years ago because of the global economic crisis, so this news marks a resetting of the regional economic landscape, but the very early leak of this news by management of the parent group also suggests that they are not too sure of their situation and/or have had trouble getting the required interest so all is not as it was three years ago that is for sure. An airline going through IPO to fund the purchase of aircraft shows that other avenues are either too expensive or not open to be tapped.

These IPOs should raise a combined HK$15 billion ($1.87 billion) in total. Keep a lookout for this story as it runs, if it fails to take off or make its target then we will know that all is not well just yet.

Now that there are problems in Korea it might be that the US Dollar will rise and stay high for some time, this will not help airlines such as these when they are raising cash in local currency and buying equipment in US Dollars. Keep this point in mind as there is always a rush to the greenback, oil and gold when war is a possibility.

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By TESTCustomwebLP TESTCustomwebLP November 23, 2010 21:27
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