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Shaanxi Coal Slashes Initial Public Offering to $661 Million

Shaanxi Coal Industry Co. (601225), China’s third-largest producer, cut its initial public offering by 59 percent to 4 billion yuan ($661 million).

It will sell 1 billion A-shares at 4 yuan apiece in Shanghai, the Xi’an, Shaanxi province-based company said today in a statement. That’s down from the 9.83 billion yuan it estimated on Jan. 8 and compares with an IPO target of 17.2 billion yuan announced in 2011.

“The market sentiment for the entire coal sector is pretty poor,” Helen Lau, a Hong Kong-based analyst at UOB Kay Hian Ltd. said today. “The timing of the IPO isn’t helping them and the only way they can sell is by pricing the stock cheaply.”

The cut comes as China, the world’s largest IPO market in 2010 with a record $71 billion raised, restarts IPOs after a halt that began in October 2012 as the securities regulator cracked down on fraud and misconduct among advisers and issuers. Regulators announced the plan to end the freeze on Nov. 30 and there are more than 700 companies awaiting approval to sell stock.

The Bloomberg Asia Pacific Coal Index, which includes 26 coal producers in the Asia Pacific, is down 6.5 percent this year, after a 37 percent decline last year.

Concern over strict government regulation on coal as part of efforts to curb pollution have weighed on coal stocks, UOB’s Lau said.

All information related to the IPO is in the exchange statements and Shaanxi Coal has no further comment, said a woman named Li who answered the phone at the company’s investor relations department. She refused to give her full name or title.

To contact the reporter on this story: Benjamin Haas in Hong Kong at bhaas7@bloomberg.net

To contact the editor responsible for this story: Jason Rogers at jrogers73@bloomberg.net

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