Subject:  Wall St welcomes Chinese listing |
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ORBITZ IPO
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Date Posted: 21:14:34 12/17/03 Wed
Wall St welcomes Chinese listing
By Richard Waters in San Francisco and Gary Silverman in New York
Published: December 18 2003 4:00 | Last Updated: December 18 2003 4:00
Wall Street yesterday threw open its doors to what could become a parade of initial public offerings from Chinese companies as China Life, the country's biggest life insurer, received a rapturous US stock market welcome.
The company's shares jumped by more than one-third when trading started on the NYSE and closed at $23.93, up $5.25, or 28 per cent higher. The company raised $3.4bn, making it the biggest IPO of the year. The shares on offer were more than 20 times subscribed.
"It is a barometer for 2004 and a sign of the demand that appears to be growing for [Chinese] deals," said David Menlow of IPO Financial Network, a specialist research firm.
The success of China Life could encourage some of the country's largest state-owned corporations to push forward with US listings of their own, he added. A handful of other Chinese companies have filed plans for big IPOs of their own, including China Construction Bank, which might raise as much as $5bn, Semiconductor Manufacturing International, which is looking for $1bn, and Ping An Insurance, which could raise $2bn.
China Life's underwriters - China International Capital, Citigroup, Credit Suisse First Boston and Deutsche Bank - will receive more than $100m in fees and the popularity of the offering bodes well for Wall Street investment banks as a group.
Leading US bankers have become frequent flyers to China, seeking underwriting assignments from the government and positioning their companies for the day when China eases restrictions on foreign businesses operating in the country.
"If the economy continues to grow at these rates, there will be continual need for investment banking services and capital markets services," said Ray Soifer, the Wall Street consultant.
The China Life market debut comes a week after Ctrip, a small Chinese online travel agency, enjoyed the biggest first-day share price jump in the US since the days of the dotcom boom. The company's stock rose more than threefold when it opened and ended with a first day gain of nearly 90 per cent.
In another echo of Wall Street's late-1990s mania for internet stocks, shares in Orbitz, the online booking site owned by the five largest US airlines, started trading after an IPO that raised $316m on Nasdaq.
After rising 18 per cent at the opening the shares settled back to trade about 6 per cent above the offering price of $26. The deal valued the company, which only moved into profit in its most recent quarter, at $1.1bn.
The Orbitz deal also signals a partial revival of technology IPOs, although not on the sort of scale seen in the last boom. Motorola, the struggling US technology group, yesterday filed plans for a $2bn IPO of its chip division in the first step in a planned spin-off of the business.
In spite of China Life's success in New York, the expected opening of trading in Hong Kong today was hit by mistakes in the publication of allocations of shares to thousands of retail investors.
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