August 30, 2008

Jinduicheng may raise USD 1.3 billion in Shanghai IPO

Reuters reported that Jinduicheng Molybdenum Group Co, Asia's largest producer of the material is planning to raise up to CNY 8.91 billion in its Shanghai initial public offer of shares.

The firm set an indicative price range of CNY 15.00 to CNY 16.57 per share for the offer, valuing the company at between 15.81 and 17.47 times its earnings in 2006, diluted for the offer. That was cheaper than a valuation of near 20 times which analysts had expected for the offer when it was under preparation early this year.

Jinduicheng plans to issue as many as 538 million new local currency A shares, or 20% of its expanded capital. It has said it needs CNY 7.65 billion to expand production and upgrade technology. Any extra proceeds would be used to supplement its working capital.

The IPO will take subscriptions and the company intends to list in Shanghai on April 17th 2008. 30% of the offer is earmarked for institutions and the rest for retail investors, but the ratio may be shifted in favour of the retail tranche if demand proves strong.

China accounts for nearly 40% of the world's molybdenum reserves. Jinduicheng's exports account for 10% of the world market.