Brightoil Petroleum, a provider of marine bunkering services in China, yesterday raised HK$1.04 billion ($135 million) through a top-up placement to fund the development of its oil projects.
Brightoil is the only licensed private enterprise engaging in China's bonded marine bunkering business. The company hopes to take advantage of the government's policy which encourages private enterprise and private capital to invest in the oil and gas sector, and has been actively expanding its bunkering network chain worldwide in recent years.
The Hong Kong-listed company is little known to many investors. But those who have done the research, appear to be interested. The accelerated bookbuild was well received in the market; the book was 3.2 times oversubscribed and consisted of about 75% institutional investors and 25% retail. The offering was covered 1.5 hours after the deal launched, according to sources. Around 25 institutional investors participated in the deal.
The company sold 300 million primary shares at HK$3.45 a share, representing a 9% discount to the closing price of HK$3.79 on July 28, and a price-to-earnings (P/E) ratio of 21 times. Shares are currently trading at 23.5 times P/E based on the forecast earnings of 2010.
The shares were offering at between HK$3.41 and HK$3.56 a share, or a discount of 6% to 10% to the previous closing price. This meant the company had the potential to raise between HK$1.02 billion and HK$1.07 billion. The deal comes with an upside option of an additional 100 million shares.
BOCI was the sole bookrunner and sole placing agent of the deal.
The company, based in Guangdong province, has a market capitalisation of HK$24.5 billion and 6.46 billion outstanding shares. Daily average turnover is 9.81 million shares per day. So far this year, as of yesterday's close, shares in Brightoil have risen 59.4% from HK$2.38 to HK$3.79, compared with a 3.34% drop in the benchmark Hang Seng Index.
Separately, Brightoil said yesterday it has agreed to acquire the entire shareholding and shareholders' loan of Access Wealth, a Jiangsu-based group which produces and trades naphtha as well as operates oil berths and storage facilities, for HK$1.49 billion. About 65% of the acquisition will be settled by cash and the remaining 35% will be settled by the issuance of new shares, the company said in a statement.
Brightoil is expecting that the acquired company will be able to boost its annual processing capacity to 2.3 million tonnes of bitumen and other petrochemical products by 2011, up from its current 1.4 million tonnes, the company said.
China's economic growth has triggered the rapid development of road transport and related infrastructure, which has enhanced the standard of road and highway construction and renovation, and boosted the demand for quality asphalt, it said.
"Upon the acquisition, the group will upgrade its existing equipment, proactively strengthen its production efficiency and install modern production facilities to increase its production and processing capability to 5 million tonnes per year," Sit Kwong Lam, chairman and CEO of Brightoil, said in a statement.
According to the Chinese Academy of Social Science, oil consumption in China is estimated to increase to 563 million tonnes in 2020.