Sany Heavy Pump $3.3 Billion In HK IPO

Sany Heavy Industry , China's largest construction machinery maker, aims to raise up to $3.3 billion in what could be Hong Kong's second-biggest stock offering this year; Sany Heavy's offering is one of several deals that are pushing through Hong Kong's narrowing IPO window, with most stock market sales pulled or on hold until markets steady across the globe.
The company, controlled by China's richest man, Liang Wengen, is offering 1.34 billion shares for HK$16.13-HK$19.38 each, putting the total offer value at up to HK$25.97 billion; The sale would be the biggest since commodities trader Glencore raised nearly $10 billion in a dual listing in Hong Kong and London in May and would top a $2.5 billion initial public offering by luxury goods maker Prada in June.
Sany, often referred to as China's Caterpillar , and rival XCMG Construction Machinery have benefited from China's construction boom over the past several years.
Sany's CEO and founder Liang is listed China's richest man by Forbes, with an estimated wealth of $9.3 billion. Liang, 55, owns 58 percent stake in Sany Group and the Hong Kong offer is set to further boost his fortunes. His stake in the company will drop to 51 percent after the Hong Kong offer, according to the offer prospectus.
Sany's success partly reflects the rapid growth of China's high-value added manufacturing sector over the past decade, with exports from makers of pricey machinery and construction equipment advancing faster than low-value goods like toys. Sany is based in Changsha, the capital of Hunan in southern China.
The company's Shanghai-listed shares closed down 1.2 percent on Monday at 14.85 yuan, its lowest level since Feb. 10. The stock is up 3 percent so far in 2011, compared with a 13.2 percent plunge in the Shanghai Composite Index .
Sinohydro, the builder of the Three Gorges Dam, said on Monday it would launch a $2.7 billion initial public offering this week, confirming a recent Reuters report.
Chinese consumer companies, including tea maker Tenfu Holdings Co Ltd and Xiao Nan Guo Restaurants Holdings Ltd recently launched $485 million worth of IPOs in Hong Kong.
Shoe retailer Hongguo International Holdings Ltd raised about $148 million late on Friday, pricing its IPO at HK$2.3 a share, at the low end of a proposed price range. Hongguo was the first company to go public in Hong Kong since the $1.2 billion IPO in July by hypermarket operator Sun Art Retail Group Ltd .
With markets continuing to be volatile, pricing plays an even bigger role in ensuring how offerings fare.
Sany is offering a 16.6% discount to its A share reference point, more than the 13.3 % discount offered by Citic, given the bigger size of the fund-raising.
Sany Heavy's Hong Kong offering values the company at up to 14.7 times its 2011 estimated earnings and up to 10.9 times its 2012 earnings, according to forecasts by the banks underwriting the deal.
China's share of global sales of construction machinery grew to 40% in 2010 from just 5% in 2005, driven by a 15% compounded annual growth in China's GDP between 2000 and 2010.
But the company makes more than 500 models of construction machinery, faces challenges due to a slowdown in the Chinese economy caused by weak global economic growth.