Wison Engineering eyes Hong Kong IPO

The Chinese engineering company is seeking to raise up to $300 million as the approaching year end is sparking a pick-up in IPO activity.
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Wison Engineering Services focuses on the petrochemical industry
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<div style="text-align: left;"> Wison Engineering Services focuses on the petrochemical industry </div>

Bankers started pre-marketing yesterday for a Hong Kong initial public offering of Wison Engineering Services. The Chinese company is seeking to raise about $200 million to $300 million.

The rest of the timetable, such as the start of the roadshow and the listing date, has not been confirmed yet. The bookrunners will discuss the next steps with the company after the pre-marketing, a source said.

The Wison Group, which is headquartered in Shanghai, has 11 member companies that span four major business sectors: engineering services, offshore and marine, clean energy, and emerging businesses (biopharmaceutical), according to the company’s website.

Wison Engineering Services focuses on the petrochemical industry and offers engineering, procurement and construction (EPC) services to clients for their petrochemical plants, said the source. It is also active in the coal chemical industry.

Part of the attraction of Wison Engineering Services, sources say, is that it is a niche company. It is also well connected in the industry.

The banks are in discussions with potential cornerstone investors, including at least one corporate investor. Some suggested that around one-third of the deal may be taken up by cornerstones.

Listed companies in the same industry include Larsen & Toubro in India, Hyundai Engineering & Construction in Korea and East China Engineering Science and Technology in China.

Bocom, Citi and Deutsche Bank are joint bookrunners.

After a couple of quiet months, Hong Kong has recently seen a pick-up in IPO activity as the year-end draws closer.

Earlier this week, Shanghai-based property developer CIFI Holdings kicked off the institutional roadshow for its Hong Kong offering, which is aiming to raise up to HK$2.07 billion ($267 million). Bocom, Citi, First Shanghai, Morgan Stanley and Standard Chartered are working on the listing, which is scheduled for November 23.

A second Chinese property developer, Future Land Development, is currently doing pre-marketing for an IPO of about $200 million to $300 million. Like for Wison, the rest of the timetable has yet to be decided. Bank of America Merrill Lynch, CICC and Haitong Securities are arranging that deal.

Also in the works is the Hong Kong listing of Chinese insurance company PICC. Bankers is starting investor education today for a deal that looks set to become the largest Hong Kong IPO this year, at $3 billion to $4 billion. The management roadshow is currently expected to kick off next Thursday (November 22) and the pricing is scheduled for November 29, after the US market close.

PICC still hasn’t narrowed done the list of bankers from the 17 it named in May, but sources say it has appointed four sponsors — CICC, Credit Suisse, Goldman Sachs and HSBC. These four have become the core group working on the deal, while Deutsche Bank is also expected to be given a leading role.

Another sizeable deal that could hit the market soon is Horizon Hospitality, the spin-off of Cheung Kong’s extended-stay hotels business through a trust, which may raise as much as $850 million. Horizon will go through a Hong Kong listing committee hearing tonight and if it gets approved, it should launch investor education shortly. Bank of America Merrill Lynch, DBS and Standard Chartered are joint bookrunners.

Even so, the value of IPOs in Hong Kong this year still lags behind that of 2011, as the outlook for the global economy remains uncertain and is resulting in volatile markets.

Hong Kong, which was the top destination for new listings globally for three straight years to 2011, ranks fifth so far this year after New York, Nasdaq, Tokyo and Kuala Lumpur, according to Dealogic. Year-to-date, Hong Kong has seen $6.2 billion of IPOs, a slide from $28.4 billion during the same period last year, the data show.

Hong Kong’s Hang Seng Index rose 1.2% yesterday and is up about 16% this year. That is well below some of the Southeast Asian stock markets, whose growth stories have attracted investor interest. For example, the Stock Exchange of Thailand SET Index and the Philippine Stock Exchange PSEi Index are both up about 25% this year.

Last month, Shanghai Fosun Pharmaceutical, which is already listed in Shanghai, raised HK$3.97 billion ($512 million) after pricing its Hong Kong IPO at the bottom of the indicated range. It was the biggest new listing in Hong Kong in three months. But its stock performance has been weak since then, which has further dampened investor enthusiasm about IPOs. Fosun Pharma rose 0.7% to HK$11.10 yesterday, leaving it about 6% below its IPO price of HK$11.80.

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