Sinohydro raises $2.1 billion from Shanghai IPO

Sinohydro, China’s largest builder of dams, has raised Rmb13.5 billion ($2.1 billion) from its Shanghai initial public offering after fixing the price at the bottom of the indicated range. The gross proceeds are 22% below the company's original $2.7 billion target.

The offering is further indication that the once sizzling primary markets in Shanghai and Hong Kong have gone cold. Several issuers have cancelled their listing plans in the past 10 days and those that have succeeded have had to sell shares at the lower end of the price range. Aftermarket trading has also generally been poor.

On Wednesday, Citic Securities, China's largest publicly traded brokerage, raised HK$13.2 billion ($1.7 billion) after issuing 995.3 million shares at HK$13.30 each. The price was fixed slightly above the bottom of the indicated range, or at a 10% discount to the firm's Shanghai-listed shares. Great Wall Motor, China's top manufacturer of sport utility vehicles, fell 8.8% in its Shanghai debut on the same day after raising Rmb3.96 billion ($619 million) from its A-share IPO.

Sinohydro sold 3 billion shares at the bottom of the Rmb4.50 to Rmb4.80 price range. Based on the company's 2011 forecast earnings, the final price represents a price-to-earnings (P/E) ratio of 10 times, according to a filing with the Shanghai Stock Exchange.

The company, which is the builder of China's Three Gorges Dam, the world's largest hydroelectric project, originally planned to sell 3.5 billion new shares but shortly before launch it trimmed the offering to 3 billion shares. The terms meant it was no longer able to meet its targeted proceeds of Rmb17.3 billion ($2.7 billion).