MIE Holdings Corporation, a Chinese upstream oil company, is looking to raise between $207 million and $243 million in an initial public offering in the US to fund the expansion of its oil output.
If successful, it will be the first traditional energy company from China to float shares in the US, and the third IPO of size by a Chinese company in the US so far this year. IFM Investments, which holds the China franchise for the Century 21 real estate agency, and budget hotel operator China Lodging both listed in the US in the first quarter.
With US secondary markets showing some strength over the past month -- although the gains have been interrupted by occasional corrections -- issuers seem to be regaining confidence in their ability to attract orders. And sources say MIE's existing US-based shareholders have encouraged the company to list on the New York Stock Exchange rather than on the Hong Kong bourse, which is a popular fundraising platform for many mainland companies.
MIE is involved in onshore oil production under shared contracts with PetroChina in three oilfields in the Songliao Basin in Heilongjiang, which is a border province connecting China and Russia. In recent years, China's domestic oil consumption growth has been increasingly outpacing production growth, driving oil companies to look for more wells and oilfields to capture the growing demand.
MIE is offering 18 million American depositary shares (ADS) at a price between $11.50 and $13.50 apiece. Each two ADS represent five ordinary shares. The offering consists of 12 million primary ADS and 6 million secondary ADS that are to be sold by MIE's four major shareholders -- Far East Energy, TPG Star Energy, Harmony Energy and Sino Link. According to bankers familiar with the deal, they are all selling a small stake of their holdings.
The deal could stretch to $279.45 million if a 15% greenshoe option is fully exercised. The additional 20.7 million ADS that may be sold as part of the shoe will be all primary.
The Beijing-based company expects to receive net proceeds of $133.2 million based on an assumed IPO price of $12.50 per ADS, the mid-point of the indicated range, the company said in a filing to the US Securities and Exchange Commission. It plans to use the proceeds to assist its future business development, with approximately $40 million to be invested in drilling new wells in existing oil fields and the remainder to be used to acquire interests in other oil fields.
MIE Holdings had estimated net proven reserves of approximately 30.9 million barrels of crude oil as of December 31, 2009. The company booked revenues of $170.9 million for 2009 and a net profit of $16.1 million, it said in the filing.
The offering price will be fixed on May 6. Bank of America Merrill Lynch and J.P. Morgan are joint bookrunners for the transaction with Macquarie Capital and RBC Capital Markets acting as co-managers.
Separately, Charm Communications, a Chinese television advertising agency, is on the road with an IPO of between $70.2 million and $85.8 million ahead of a listing on Nasdaq. The company, which also engages in media investment management, is offering 7.8 million ADS, all primary, at a price between $9 and $11. Each ADS represents two common shares.
An additional 1.17 million ADS, all primary, will be offered if a 15% greenshoe is fully exercised, which would allow the company to raise up to $98.7 million.
Credit Suisse is the sole bookrunner of the deal.