About 360 investors were said to have participated in a deal that saw institutional allocations finalised on Monday. The retail IPO will open on Thursday, running until next Tuesday for listing on December 10.
At HK$2.96 per share, the company has raised HK$452.8 million ($58 million) from an institutional placement of 153 million shares. The retail offering will comprise a further 17 million shares and there is also a greenshoe of 25.5 million shares.
Nomura lead managed the deal, with Core Pacific and HSBC as co-leads and CEF, Cresvale, Guotai, ICEA, ING Barings, OpenOffering and Phoenix as co-managers. Pre-greenshoe, the offering will amount to 30% of the company's issued share capital.
At this level, the company was priced at a p/e ratio of 8.45 times 2001 earnings on a fully diluted basis, with allocations split 70% Asia, 20% Europe and 10% Japan.
Observers say that they were surprised at the high quality of the book for such a small deal. Most investors were said to be drawn both by the company's stand-alone fundamentals and positive sentiment towards the China market, which has seen the China Enterprises Index rise just over 11.5% year-to-date, versus a roughly 24% drop in the Hang Seng Index.
Zheijiang Glass also represents a new breed of privately-owned company which is being pushed to the fore by the Chinese government following WTO accession. Indeed, it only became fully private in September after starting life as a collective enterprise and later becoming a joint-stock company with five sponsors.
Bankers say one of the chief selling points was its profitable niche in the flat glass sector, where it currently ranks as number five by market share. Unlike many state-owned enterprises it does not have any legacy debt problems and following its IPO will move from a gearing level of 11% to a net cash position.
Retail investors are likely to be drawn by the company's growth potential. Between 1998 and 2000, it has grown by a compound annual growth rate (CAGR) of 114%. The company is also situated in one of China's fastest growing provinces and during roadshows highlighted high efficiency ratios including output per employee of five times the national average.
