China is backing a planned Hong Kong listing of a state-owned energy engineering company to raise as much as US$1.96 billion.
The US$40 billion Silk Road Fund, set up by the central government in November 2014 to finance its “One Belt, One Road” development plan, is the largest cornerstone investor in China Energy Engineering Corp. (CEEC) in its proposed initial public offering, the Wall Street Journal reports.
CEEC, controlled by power conglomerate China Energy Engineering Group Co., is offering 8.8 billion shares at HK$1.59 (20.5 US cents) to HK$1.73 apiece.
It has locked up more than half of the shares from 20 cornerstone investors.
Chinese state-owned companies have increasingly relied on cornerstone investors since China’s market turmoil began in June, an indication that ordinary IPO investors are becoming difficult to attract.
The Silk Road Fund made its maiden IPO investment in October when it chipped in US$100 million to become the largest cornerstone investor in Chinese investment bank China International Capital Corp. in a US$811 million float.
The share offer was oversubscribed and the deal was priced at the top of the range. The stock gained more than 7 percent when it started trading on Nov. 9.
CEEC is engaged in the design and construction of power plants, with projects across China and in more than 80 countries overseas, according to aregulatory filing.
It also has businesses in equipment manufacturing, explosives and cement production and investments in power projects.
The company was responsible for the construction of the Three Gorges Project in Central China’s Sichuan province and a nuclear-power project in Southwestern China’s Guangxi province, according to its website.
CEEC recorded a net profit of 2 billion yuan (US$313 million) in the first five months of the year, with unaudited total assets of 58 billion yuan at the end of September, according to the filing.
The company will price the deal on Dec. 2 and start trading on Dec. 10.
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