Bankers yesterday started investor education for the Hong Kong initial public offering of AAG Energy, a Chinese natural gas producer.
The company is expected to raise between $160 million and $200 million. The management roadshow is expected to start on December 5, and the listing is slated for December 20, according to a term sheet.
It has been a relatively busy couple of weeks for the Hong Kong IPO market as the year-end approaches. This week, PICC Group is set to price its high-profile H-share IPO of between $3 billion to $3.6 billion, which looks to be the biggest in the city this year.
AAG Energy’s offering will bring the company’s free-float to 25% of the enlarged share capital. Of the deal, 10% is earmarked for the Hong Kong public, while the remaining 90% is intended for international investors. There is a 15% greenshoe option. All shares are new.
The company, which produces and sells natural gas in China, said that it plans to use more than half of the proceeds for the development of coalbed methane in the Mabi concession, which is situated in Shanxi province, in the southern Qinshui Basin.
It also plans to use them to pay for the exploration of coalbed methane in the Panzhuang concession and Mabi, and for acquisitions or joint ventures in other coalbed methane projects, as well as for working capital and general corporate purposes.
AAG Energy has no direct comparables, but people are likely to look at peers such as London-listed Green Dragon Gas, Sino Oil And Gas and Far East Energy, a source said yesterday.
Some of the attractions of the company are a tight gas market in China (which means there is a market for it), and that it is backed by high-quality private equity investors — Warburg Pincus and Baring Private Equity Asia, the person noted.
The management roadshow will start from December 5 and continue until December 13, when the pricing is expected. The Hong Kong public offering is expected to start from December 10 and end on December 13.
Barclays and J.P. Morgan are global coordinators for the deal. Haitong Securities joins them as a bookrunner.
The Hang Seng Index, which fell 0.6% yesterday, is up nearly 18% since the start of the year.
