Hong Kong’s record run of initial public offerings is faltering as tumbling stock prices prompted Bluestar Adisseo Nutrition Group and China Datang Corp. to delay or withdraw a maximum $2.6 billion of share sales.
Bluestar Adisseo, the animal-nutrition producer backed by Blackstone Group LP, said it withdrew its IPO because of “continued and excessive” market volatility. Market conditions are affecting the valuation of Datang’s renewable energy unit, causing it to delay a share-sale road show scheduled for this week, said two people with knowledge of the plan who declined to be identified because the information is confidential.
The benchmark Hang Seng Index slumped 7.7 percent from its Nov. 8 high as China stepped up measures to contain inflation and Ireland accepted a European Union-led bailout. The slump may curb 2010’s record $44 billion of initial sales by 75 companies including Agricultural Bank of China Ltd. and AIA Group Ltd.
“Since the market started to correct, investors started to think twice about IPOs,” said Alex Au, managing director of Richland Capital Management Ltd. in Hong Kong, which oversees $300 million of assets. “China tightening has been a big concern in the market, and Europe debt is certainly also a big macro event. It’s making people lower their risk appetite.”
Twenty-one of the stocks listed in Hong Kong this year have declined since debut by as much as 36 percent, according to data compiled by Bloomberg. United Co. Rusal, the world’s largest aluminum producer, lost 12 percent since raising HK$17.4 billion ($2.2 billion) in January.
China Rongsheng Heavy Industries Group Holdings Ltd., the fourth-biggest offering in Hong Kong this year, has sunk 12 percent from its Nov. 19 debut. The nation’s biggest shipyard outside state control sold HK$14 billion of shares at about 30 times this year’s estimated earnings, compared with a multiple of 27 for China Shipbuilding Industry Co., the nation’s biggest maker of vessel equipment.
“In the last few months, companies that have tapped the market have gotten very good valuations and raised a lot of money,” said Andy Mantel, founder and chief executive officer of Pacific Sun Investment Management Ltd. in Hong Kong. “It’s not surprising that some have delayed because of the sheer number of IPOs that are happening right now.”
Sateri Holdings Ltd. and Greatview Aseptic Packaging Co. said at separate media briefings in Hong Kong today that they are pushing ahead with their IPO plans. Sateri, a Chinese cellulose maker, is seeking $600 million and plans to price its stock on Dec. 2 and start trading on Dec. 8, according to its prospectus. Greatview, a beverage packaging company based in Beijing, is seeking about $214 million.
“I am not worried at all, no matter how the stock market is affected,” Greatview’s CEO Jeff Bi told reporters via a video conference. “If people stop drinking milk and juices, then I will be worried.”
Stocks in the region declined yesterday, dragging the MSCI Asia Pacific Index to a one-week low after North Korea shelled South Korea and Standard & Poor’s lowered Ireland’s credit rating.
The MSCI index was little changed today and has fallen 3.5 percent from a two-year high set on Nov. 8 amid speculation China will intensify efforts to curb inflation that grew last month at the fastest pace in two years. Chinese policy makers last week boosted the amount of money that lenders must set aside for the fifth time this year.
The IPO delays won’t come “as any great surprise when we look at what’s happened in the markets in China over the past week or so,” Michael Parker, senior analyst at Sanford C. Bernstein & Co., said in Hong Kong.
China New Materials Holdings Ltd., a chemical maker in eastern China, canceled its IPO press conference yesterday and has delayed its Hong Kong offering for at least two days, two people with knowledge of that sale said. Calls to the company’s head office in Zibo city, Shandong province, weren’t answered.
Adisseo, based in Antony, France, canceled its IPO after consulting with the banks managing the sale, the company said in a statement to the Hong Kong stock exchange yesterday. The company had been seeking about $1.56 billion in its IPO, according to its IPO prospectus.
Blackstone, the world’s largest private-equity company, has a 20 percent stake in China National Bluestar Group Corp., which owns Bluestar Adisseo, the prospectus said.
China Datang, the nation’s second-largest power producer, had sought about $1 billion from selling shares in China Datang Corp. Renewable Power Co. amid expectations demand for clean energy will increase in the nation.
Huang Yuan, head of the news office at China Datang Corp. in Beijing, didn’t answer calls.
The world’s fastest-growing major economy burns coal in about 80 percent of its power plants and wants at least 15 percent of its energy to come from renewable resources by 2020. About 17.5 percent of China Datang’s electricity generating capacity comes from clean energy sources, it said last December.
In New York, Syswin Inc. slid 11 percent to $6.20 in its first day of trading after the Beijing-based real-estate agency reduced the size of its U.S. initial public offering by half. Syswin sold 9.6 million American depositary receipts at $7 each after cutting the offering from 12 million at $9.25 to $11.25, government filings and data compiled by Bloomberg show.
Declines in the markets have also affected debt issues. Hongkong Electric Holdings Ltd. delayed its dollar bond sale of as much as $500 million because of tension on the Korean peninsula, two people familiar with the matter said, at least the third Asian company to postpone sales this week.
“With the market coming off, investors are becoming more realistic,” said Richland Capital’s Au.
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