The Wall Street Journal - China Yongda Automobiles Services Holdings, which sells BMWs and Toyotas in China, said Monday it has scrapped its plan to raise up to US$433 million in an initial public offering in Hong Kong owing to deteriorating equity markets, in the biggest IPO casualty of weak markets in Asia this year.
The Chinese motor-vehicle dealer, which was due to list in Hong Kong on Wednesday and price the shares Monday, had already extended its sale of shares by five days last week with a third sold to two cornerstone investors, but that wasn't enough to offset the weak demand due to falling markets. It said Monday that it might relaunch the IPO when conditions pick up, but didn't elaborate.
Yongda had set a price range of between 7.60 Hong Kong dollars and HK$10.80 (US$0.98 to US$1.39) for its sale of 312.2 million shares on May 13, and extended the order-taking from institutional investors to a May 28 deadline from May 23, last week.
The company has become the latest victim of cooling market demand for Asian IPOs, with investor enthusiasm undermined by uncertainties about the global economy. In particular, concerns that European's sovereign-debt issues could trigger wider problems are weighing on investors' minds. The MSCI Asia Pacific index is down 3.4% this year and lost 11% in the past month.
Yongda's deal is the largest IPO to be withdrawn in Asia so far this year, after M&L Hospitality Trusts called off its up to 509 million Singapore dollar (US$397 million) IPO in Singapore in April, according to data provider Dealogic.
The postponement is also noteworthy because Yongda had secured US$150 million of cornerstone investment from Baring Private Equity Asia V Holding (7) Ltd. and Oman sovereign wealth fund Oman Investment Fund.
Meanwhile, Yongda isn't the only company to have been hit by volatile markets. China Nonferrous Mining Corp., which lowered the fundraising target for its Hong Kong initial public offering to up to US$313 million from US$500 million, has delayed the launch of the retail portion of its IPO to accommodate a longer roadshow, other people familiar with the situation said last week.
China Nonferrous, the mining unit of state-owned China Nonferrous Metal Mining Group, which owns copper mines in Zambia, started taking orders from institutional investors May 15 and is selling 870 million shares, of which 10% have been set aside for retail investors. The shares are being sold at an indicative price range of HK$2.1-HK$2.8 each, according to a term sheet seen by Dow Jones Newswires earlier.
The roadshow is the official bookbuilding period and helps determine a final price for the shares.
However, choppy market conditions didn't deter companies including an Inner Mongolia-based coal producer and an ultra high-end jeweler lining up to tap funds in Hong Kong.
Inner Mongolia Yitai Coal Co. plans to start gauging investor interest Tuesday in premarketing for its around US$1.4 billion Hong Kong IPO in which it aims to sell 258.4 million H-shares, according to a term sheet.
The company—which has U.S.-dollar-denominated B shares listed in Shanghai—plans to start taking orders from institutional investors June 11 and begin the retail offering June 15. It will list on the Hong Kong stock exchange June 27, the term sheet said. The company will use the proceeds to expand its railway, build coal mines, repay bank loans and for working capital.
Graff Diamonds on Monday kicked off its public offering to raise US$1 billion from a Hong Kong IPO by taking orders from retail investors. The jeweler is selling shares at an indicative price range of HK$25-HK$37, according to a term sheet.
HSBC Holdings PLC, Bocom International and UBS AG are handling Yongda's IPO, according to its listing prospectus.
