Bankers started pre-marketing yesterday for an initial public offering of Termbray Petro-king Oilfield Services, which is aiming to raise about $100 million, sources said.
The oil and gas technology services company is expected to kick off the roadshow on Friday (February 22) and the final price should be set on February 27. The listing on the Hong Kong main board is scheduled for early March. CCB International, China Galaxy and CIMB are joint bookrunners for the deal.
The deal is another sign that IPO activity is returning to the market after the Lunar New Year holidays last week, which kept the Hong Kong stock market closed from Monday to Wednesday. The deal flow had slowed prior to the holidays.
As reported earlier, Xinchen China Power Holdings also started pre-marketing on Monday for a similarly sized IPO of about $100 million. Xinchen China is an engine-manufacturing company that is currently part-owned by Hong Kong-listed Brilliance China Automotive Holdings.
Petro-king
Petro-king is a comprehensive oil and gas field technology service company specialising in well drilling and completion, according to its website. Its services include technical consultation, project management, well drilling, completion, stimulation and production of surface and testing equipment.
Petro-king says it has a business presence in China, Indonesia, Russia, Australia, Nigeria, Saudi Arabia, Yemen, Algeria, Trinidad and Tobago, Turkmenistan and Kazakhstan. Its major clients include Sinopec, PetroChina, Cnooc, Shell, BP, Rosneft, ConocoPhillips, CACT Operators Group, Devon, Fareast, EOG and Sunwing Energy.
Part of the attraction of Petro-king is that it does a lot of high-end oilfield services work and has advanced turbodrilling technology, a source said. Two main comparables that are listed in Hong Kong are Anton Oilfield Services Group and SPT Energy Group, the person noted.
The company plans to use the proceeds to finance business expansion.
Xinchen China Power
Xinchen China plans to use the proceeds from its IPO to fund the expansion of production capacity and the development of new products, as well as for research and development, a source said. Buying into the company is a way of getting a leveraged exposure to the growth of domestic Chinese auto producers, the person added.
According to a draft listing document posted on the Hong Kong stock exchange website, Xinchen China is one of the leading manufacturers of engines for passenger cars (PV) and light commercial vehicles (LCV) in the independent branded segment of the China market in terms of sales volume. It develops and sells both light-duty petrol and diesel engines and focuses on engines with a high performance-to-price ratio, as well as low fuel consumption, emissions and noise, for the mid- to low-end auto market.
The company has no direct comparables, but investors will likely look at companies such as Weichai Power, a Hong Kong-listed manufacturer of high-speed diesel engines in China.
Some 25% of Xinchen China will be sold to the public, reducing Brilliance China’s stake to about 31.9%, from the current 42.5%.
Bank of America Merrill Lynch was initially mandated as the sole bookrunner, but in the past few days Deutsche Bank has been added to the line-up. The two banks are now joint global coordinators and bookrunners for the deal, another source said yesterday. BoA Merrill remains the sole sponsor.
The timetable has not been finalised yet, but the bookbuilding is currently expected to kick off sometime next week, with a listing expected in early March, sources said.
Investor sentiment has generally warmed since the start of this year as global stocks maintain their upward momentum. Hong Kong’s Hang Seng Index, which fell 0.3% yesterday, has gained about 3.2% year-to-date, building on the 23% rise it booked last year.
The IPO volume in Hong Kong stands at $788 million so far this year, with about half coming from Chinalco Mining Corporation International’s $399 million offering in January, according to Dealogic.
