US-based Nexteer Automotive eyes Hong Kong IPO

The auto parts company seeks to raise as much as $500 million. Meanwhile, China Harmony Auto and Wuzhou International are expected to close books today for their offerings.
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Nexteer is a global leader in advanced steering and driveline systems
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<div style="text-align: left;"> Nexteer is a global leader in advanced steering and driveline systems </div>

Bankers are set to start pre-marketing today (June 5) for the Hong Kong initial public offering of Nexteer Automotive, a Michigan-based steering and driveline systems supplier that is seeking to raise about $400 million to $500 million, a source says.

The company was formerly part of Delphi and General Motors, before GM sold it to China-based Pacific Century Motors in 2010. Chinese state-owned parts manufacturer AVIC Automobile Industry Holding then acquired a 51% stake in Nexteer’s owner, Pacific Century Motors, according to Nexteer.

Through the IPO, the company plans to sell 30% of the company, and all shares will be new, the source says, adding that the company chose to come to Hong Kong because it wants to expand its business in China.

According to the current timetable, the roadshow is expected to start on June 17 and continue until June 26. The listing is scheduled for July 4.

Nexteer is a global steering and driveline supplier solely dedicated to electric and hydraulic steering systems, steering columns and driveline products for original equipment manufacturers, according to the company. It booked revenue of $2.2 billion in 2011.

The company has 20 manufacturing plants, five regional engineering centres, 10 customer service centres and three vehicle performance centres in North and South America, Europe and Asia.

It serves more than 50 customers in every major region of the world, it says, including GM, Fiat, Ford, Toyota, Chrysler and PSA Peugeot Citroen, as well as automakers in India, China and South America.

Investors will likely compare Nexteer to other autoparts-related companies, such as Hong Kong-listed Zhejiang Shibao, Japan-listed JTEKT and US-listed TRW Automotive.

BOC International and J.P. Morgan are joint global coordinators and bookrunners for the IPO.

Wuzhou International and China Harmony
Despite recent market volatility, there has been a steady flow of companies hitting the Hong Kong IPO market since the city’s first billion-dollar IPOs of the year were successfully completed last month.

The aftermarket performance of the biggest Hong Kong IPOs so far this year has been rather lacklustre, however, which is not such an encouraging sign for others that follow. China Galaxy Securities rose 0.8% yesterday to end at HK$5.36, which is about 1.1% above the IPO price of HK$5.30, while Sinopec Engineering rose 0.6% to finish at HK$10.12, which is 3.6% below the offer price of HK10.50.

The Hang Seng Index ended yesterday’s trading almost unchanged, but it is now down 1.6% year-to-date.

The management roadshow and bookbuilding are expected to conclude today for Wuzhou International Holdings, a Chinese property developer that is seeking to raise $169.1 million to $220.5 million from its IPO. The books opened last Wednesday, and the listing is slated for June 13.

The company is offering 1.14 billion new shares for a price between HK$1.15 and HK$1.50, set to raise as much as $220.5 million. There is a 15% greenshoe option that if exercised in full could boost the size of the deal to as much as $253.6 million. Ten percent of the deal is set aside for the Hong Kong public offering, and the remaining 90% is targeted for the institutional tranche.

The company plans to use 60% of the proceeds to finance the land acquisition, construction and development of all of 16 projects with a memorandum of understanding signed, according to a term sheet. The rest will be used to finance the construction and development of projects other than those with MOUs signed, as well as for working capital and other general corporate purposes.

As of the end of last year, it was a top-three developer and operator of specialised wholesale markets in China, according to the company’s prospectus. It was also a top-20 developer and operator of multi-functional commercial complexes in the Yangtze River Delta Area, based on the total gross floor area completed, under development and held for future development, it says.

Bocom International and Macquarie are joint global coordinators for the deal, and they are joined by First Shanghai and GF Securities as bookrunners.

Another company that follows the similar timetable is China Harmony Auto. The car dealership group that focuses exclusively on luxury vehicles in China is also expected to close the books today for its IPO of $215 million to $315 million. The listing is also schedule for June 13.

Goldman Sachs is the sole global coordinator for China Harmony’s IPO, as well as a joint sponsor and bookrunner together with CICC.

Meanwhile, bankers last week began testing investor appetite for Freetech, a China-based asphalt pavement maintenance services company that was set up by a Hong Kong entrepreneur. The deal size is expected to be roughly $100 million to $200 million, with the roadshow potentially starting this week or early next week.

CICC and Citic Securities are arranging the deal.

Going to the US
In the US, LightInTheBox Holding, a Chinese online retail company, is looking to raise up to $87.2 million from its IPO and list on the New York Stock Exchange.

If successful, it will be the first Chinese new listing in the US since the IPO of YY, a video-based Chinese social network, in November last year, according to Dealogic. YY raised $81.9 million from its offering, successfully countering the negative sentiment after accounting scandals had damaged the reputation of Chinese companies in the US market.

The roadshow for LightInTheBox started on May 24 in Asia time, and the books are expected to close today at noon for Asian accounts. The stock is set to start trading in New York on Thursday.

It is offering 8.3 million American depositary shares (ADSs) for a price between $8.50 and $10.50 each, and is poised to raise $70.6 million to $87.2 million. The 8.3 million ADSs represents 16.6 million ordinary shares.

There is a 15% greenshoe option that if exercised in full could increase the size of the deal to up to $100.2 million.

The company is a global online retailer that delivers a wide selection of lifestyle products directly to consumers around the world. Its major markets are Europe and North America, and uses global online marketing platforms such as Google and Facebook to reach its customers, according to the company’s preliminary prospectus.

Credit Suisse and Stifel are joint bookrunners for the IPO.

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