CDB Leasing Breaks Cornerstone Records With $799 Million IPO

  • Arm of biggest policy lender prices Hong Kong IPO near low end
  • Cornerstone investors accounted for record 78.6% of share sale

China Development Bank Financial Leasing Co. broke two records with the cornerstone tranche of its Hong Kong initial public offering, which raised $799 million after pricing near the low end of a marketed range.

The Shenzhen-based aircraft lessor sold 3.1 billion shares at HK$2 apiece, after earlier offering them at HK$1.90 to HK$2.45 each, according to terms for the deal obtained by Bloomberg on Thursday. CDB Leasing sold 78.6 percent of the offering to cornerstone investors, who commit to hold their stock for six months in return for early and guaranteed allocation, the terms show. 

That would be the largest proportion allocated to such buyers for any Hong Kong listing of at least $500 million, according to data compiled by Bloomberg. The previous record was set by bad-loan manager China Huarong Asset Management Co., which sold 70.3 percent of its $2.5 billion IPO last year to such stock buyers, the data show.

CDB Leasing, an arm of China’s biggest policy lender, leaned on other state-backed companies to complete its offering during one of the most tumultuous times for investors in years. U.K. voters’ unprecedented decision last week to leave the European Union sent shockwaves across global equity markets and caused the pound to plummet to its lowest in more than three decades. 

The IPO comes after bigger rival BOC Aviation Ltd., which raised HK$8.7 billion ($1.1 billion) at HK$42 apiece and started trading last month. Shares of Asia’s biggest lessor, owned by Bank of China, closed Thursday 6.3 percent lower from its offer price at HK$39.35 in Hong Kong. CDB Leasing aims to start trading July 11, its prospectus shows.

Government-owned power generator China Three Gorges Corp. agreed to purchase 42.1 percent of CDB Leasing’s IPO shares as a cornerstone investor. The investment sets a record for the highest proportion allocated to a single cornerstone buyer in any major listing in the city, data compiled by Bloomberg show.

CDB Leasing’s offering will add to the $6.6 billion raised from first-time share sales in Hong Kong this year, down from $17.4 billion in the same period in 2015, according to the data. Bank of America Corp., Citic CLSA Capital Markets Ltd., Deutsche Bank AG, HSBC Holdings Plc and UBS Group AG are joint global coordinators of the IPO.

CDB Leasing offers its leasing services for aircraft, infrastructure, vessels, construction machinery and other products, grabbing 6.12 percent of the market in China last year, according to the company’s prospectus.

Aircraft leasing accounted for 45 percent of CDB Leasing’s total revenue last year, its prospectus showed. The company had 191 aircraft it owns and manages at the end of December, including Airbus Group SE A320s, A330s and Boeing Co. 737s and 777s. It had orders and commitments for 224 planes. Customers include China Southern Airlines Co., Indigo and Emirates.

Leasing of energy and transportation infrastructure accounted for 32 percent of its total revenue last year, followed by ships and construction machinery.

    Before it's here, it's on the Bloomberg Terminal.