SINOTRANS Shipping Ltd priced the largest Chinese shipping initial public offering since at least 1999 at the top of a pricing range, raising HK$11.45 billion (US$1.5 billion), said two bankers familiar with the sale.
The shipping line sold 1.4 billion new shares at HK$8.18 each in the Hong Kong IPO, said the bankers who declined to be identified before an official statement. The offering of a 35-percent stake values the Hong Kong dry-bulk unit of China National Foreign Trade Transportation (Group) Corp at US$4.2 billion.
Sinotrans Shipping is raising funds for new ships and acquisitions because of surging imports of coal and iron ore in China and India. Demand for raw materials in the world's two most populous countries has allowed dry-bulk shippers, including Pacific Basin Shipping Ltd and STX Pan Ocean Co, to more than double rates in the past year.
"The shipping industry is a market focus at the moment and the outlook is positive," Alex Tam, a Hong Kong-based analyst at CSC Securities Ltd, told Bloomberg News. "Investors are also willing to give a premium to companies with China exposure."
The final pricing values Sinotrans Shipping at about 14 times 2008 earnings as estimated by the investment banks arranging the sale. China Shipping Development Co, the nation's largest oil carrier, trades at about 12.7 times next year's projected profit, and Pacific Basin trades at 9.7 times, according to Bloomberg data.
Hong Kong individuals ordered 252 times the number of shares initially set aside for them, said the people. International institutions sought about 85 times the shares available to them after more stock was allocated to Hong Kong individuals to cover demand, the bankers said.
BOC International Holdings Ltd and UBS AG arranged the share sale.
Sinotrans Shipping may expand its IPO by another 15 percent to meet demand and stabilize the stock price.