IFR Asia – May 05, 2018

(Jacob Rumans) #1

News


Xiaomi blockbuster heads to HK


„ Equities Smartphone maker files for ‘game-changing’ IPO under dual-class share rules

BY FIONA LAU

Chinese smartphone maker
XIAOMI last week became the
first issuer to take advantage
of Hong Kong’s new listing
rules with an application for
the city’s biggest IPO from the
technology sector.
The filing came only days
after rules aimed at wooing
technology listings took effect
on April 30, giving Hong Kong
an immediate boost in the
global competition to lure high-
profile Chinese IPOs.
Xiaomi is looking to
raise about US$10bn from
the deal as early as June,
according to people close to
the deal. It also plans to offer
Chinese Depositary Receipts
to mainland investors if
regulations allow.
At US$10bn, Xiaomi’s IPO
will be the world’s largest since
the US$25bn listing of Chinese
e-commerce giant Alibaba
Group in September 2014. It
is also set to be the second
largest Hong Kong IPO after the
HK$159bn (US$20.5bn) listing
of insurer AIA in 2010.

More significantly, the deal
will introduce dual-class shares
to the Hong Kong exchange for
the first time, giving the stock
exchange an immediate return
on its reforms and setting the
stage for similar listings to

follow.
“It’s a game-changing IPO for
Hong Kong. A successful Xiaomi
listing will definitely attract
more jumbo tech listings in the
city,” said a banker away from
the deal.

MEITUAN-DIANPING, China’s
largest provider of on-demand
online services, has already
ditched the US for a Hong Kong
IPO of several billion dollars.
CLSA, Goldman Sachs and
Morgan Stanley are joint

Cambodian gamble 06 Foxconn’s strategic tranche 07 Indian developers to raise equity 08


Shandong trials new CB model


„ Bonds Steelmaker’s convertible perpetual would be a first in the interbank market

BY INA ZHOU

SHANDONG IRON & STEEL GROUP is
planning to issue China’s first
convertible perpetual bond,
giving investors the option to
convert the instrument into
equity as part of its efforts to
reduce debt.
The state-owned steelmaker
intends to sell Rmb5bn
(US$787m) perpetual non-call
five securities with features
similar to convertible bonds,
according to a preliminary
bond prospectus filed with

the National Association of
Financial Market Institutional
Investors.
The bonds, to be sold in the
interbank bond market, will
give investors the option to
swap the notes for equity of
Laiwu Iron & Steel, an unlisted
subsidiary of the issuer,
during the first five years. The
exchange price would be based
on the net asset value per share
of Laiwu, according to the
prospectus.
Investors would then be
able to exchange Laiwu’s

equity for shares of Shanghai-
listed Shandong Iron & Steel
Co, another subsidiary, when
the listed company issues
new shares through private
placements.
In addition, should Laiwu
launch an IPO during the life
of the notes, there would be
an option for investors to swap
the bonds or Laiwu’s unlisted
equity for the newly listed
shares.
The plan, subject to approval
from NAFMII, would make
Shandong Iron & Steel the

first Chinese company to
offer equity-linked products
in China’s interbank market,
as well as the first to do so
through an undated deal.
Analysts said that the
proposed innovation was a
way for the issuer to make
perpetual bonds more attractive
to investors. Perps have become
a hard sell in the domestic
market since the first coupon
reset on onshore perps took
place in February.
China Jilin Forest Industry
Group then took the
unprecedented step of paying a
step-up coupon on its Rmb1bn
perpetual bonds, giving a
wake-up call to investors who
had viewed the format as
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