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Sany Roadshow Proceeds After $3.3 Billion Share-Sale Delay

Sany Heavy Said to Postpone $3.3 Billion Stock Sale on Rout
Sany Heavy joins other companies including China EverbrightBank Co. in pushing back stock sales as concerns about the European debt crisis and slowing growth in the U.S. depressed markets globally. Photographer: Forbes Conrad/Bloomberg

Sany Heavy Industry Co., the construction-equipment maker run by China’s richest man, is pushing ahead with an investor roadshow after delaying its $3.3 billion Hong Kong stock sale.

“We aim to grasp an opportunity when the market turns relatively favorable,” Tang Xiuguo, president of parent Sany Group Co., said today in a phone interview. The company, based in Changsha, Hunan province, intends to complete the roadshow in the U.S. and Europe by the end of the month, he said.

Sany delayed the sale pricing, previously set for Sept. 26 because of “short-term uncertainties,” Tang said. XCMG Construction Machinery Co., China’s biggest crane maker, also plans to cut the size of its Hong Kong share sale as the city’s benchmark index heads for its biggest monthly drop in almost three years amid European debt concerns and slowing U.S. growth.

“Investors aren’t willing to subscribe for new shares aggressively as they expect the market will continue falling,” said Ronald Wan, a Hong Kong-based managing director at China Merchants Securities Co., which oversees about $1.5 billion. “There’s a mismatch in price expectations between investors and issuing companies, which is unlikely to be solved this year.”

Offer Plan

Sany, headed by Chairman Liang Wengen, had planned to offer 1.34 billion shares at HK$16.13 to HK$19.38 apiece, according to a term sheet sent to investors. It was seeking funds to help expand production as it begins challenging Caterpillar Inc. and Komatsu Ltd. in overseas markets.

The share-sale delay won’t affect Sany’s expansion plans, including construction of a U.S. plant that’s due to open this year, as the company has enough cashflow to finance operations Tang said.

“If the IPO goes through successfully, we may launch new projects in the U.S.,” he said. Still, the company is “in no rush” to complete the share sale, he said.

Sany, China’s biggest maker of concrete machinery, fell 1 percent to 15.13 yuan at the 3 p.m. close in Shanghai. The stock has gained 5 percent this year while the Shanghai Composite Index has dropped 13 percent. Sany doubled first-half net income to 5.9 billion yuan ($923 million).

Sany’s delay comes after a stock-market sell-off that has caused investors to lose money on 44 out of 51 Hong Kong initial public offerings this year, according to Bloomberg data. Shoemaker Hongguo International Holdings Ltd. tumbled 15 percent today on its trading debut.

The Hang Seng Index has dropped 14 percent this month. The Bloomberg Hong Kong IPO Index, which measures the first-year performance of new stocks, has fallen 27 percent this year.

XCMG Construction

XCMG Construction plans to pare the size of its Hong Kong offering to 15 percent of outstanding shares, according to two people with knowledge of the matter. The sale has already been delayed.

Xiao Nan Guo Restaurants Holding Ltd. scrapped a HK$581 million ($75 million) IPO, according to a Sept. 21 filing. China Everbright Bank Co. pulled a $6 billion offering in August, having considered cutting the size of the sale in half as stocks dropped.

Companies have raised $40 billion in Hong Kong share sales this year, led by China Construction Bank Corp.’s $8.3 billion offering last month. The tally is about the same as in the year-earlier period.

Sany’s Liang topped Forbes Asia’s 2011 China rich list with an estimated wealth of $9.3 billion. The company’s three other founders, including Tang, are also billionaires, according to the magazine.

Sany is set to open a factory this year in Peachtree City, Georgia. It also has overseas facilities in Germany, India and Brazil, according to its website. The company, which also makes cranes, wind turbines and port equipment, employs more than 60,000 people, it said.

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