China Power: IPO generates overcapacity

Sensible valuation and marketing strategy ensures strong take-up.

China Power International Development CPI generated an allocation headache for lead manager Merrill Lynch on Friday after all tranches of its HK$2.5 billion $321 million IPO closed multiple times oversubscribed. Not since Mengniu Milk's IPO in early June has a HKSE listing by a Chinese company generated such a strong response from investors.

This enabled pricing of the 990 million share deal to come towards the top end of a HK$2.10 to HK$2.60 range, with pricing fixed at HK$2.53 per share. The company and lead manager are said to have deliberately left some upside to allow institutions to build a secondary market position after being massively scaled...

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