China Energy $1.96b IPO backed by cornerstones

No surprise to the market as yet another jumbo Hong Kong deal is largely pre-sold to cornerstone investors ahead of the institutional bookbuild.
A nuclear plant under construction by China Energy in Zhejiang province
A nuclear plant under construction by China Energy in Zhejiang province

China Energy Engineering is selling at least 64% of its initial public offering in Hong Kong to cornerstone investors, aping other jumbo offerings this year to help navigate an uncertain market and ensure the deal is completed.

Nearly all the billion-dollar IPOs completed since China's summer market rout have been structured with a cornerstone tranche that exceeds half the total deal size. Bankers argue that it is a healthy strategy that minimises the issuer’s risk but these deals are often labelled as “friends and family” transactions and lack a genuine price discovery process.

For China Energy it may yet provide a safety net if investor sentiment...

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