Air China Raises $1.07 Billion in Hong Kong
Share Pricing
Air China, China's leading international airlines, has
raised US$1.07 billion after initially pricing its shares
in Hong Kong. It is offering 2.8 billion shares, or 31%
of its equity, at HK$2.98 ($0.38) each, near the top of
a HK$2.35-$3.10 range. Strong demand meant its shares
were more than 83 times oversubscribed by retail Chinese
investors.
The company, confident that it would be successful in
raising capital, placed an order with Airbus worth US$1.33
billion deal for the delivery of 23 A319, A320 and A321
jetliners.
Its flotation price values the business at nearly 11
times its projected 2005 earnings. By contrast, rivals
China Eastern Airlines and China Southern Airlines trade
at 11.8 times and 14.9 times forward earnings, respectively.
Air China is the last of China's three large airline
groups to list, the others being China Southern and China
Eastern. Due to heavy demand from individual retail investors,
the public portion of the float was lifted to 40% of the
offering from 10%, after it was oversubscribed 83 times.
In a first, Air China will begin trading on the Hong
Kong and London stock exchanges next Wednesday. While
London has been courting Chinese businesses in the IPO
market for a long time, this is a significant first success.
For Chinese companies, London offers the advantage of
not requiring separate prospectus filings from Hong Kong.
With the continued fall of the US dollar, Chinese companies
are exploring alternatives to listing in the US. This
trend is likely to continue as long as the dollar does
not stabilize.
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