By Prudence Ho
HONG KONG--Tianhe Chemicals Group, whose relationship with Swiss
bank UBS AG has triggered scrutiny , hopes to raise up to US$818
million in an initial public offering in Hong Kong.
The maker of specialty chemicals is selling 2.82 billion shares,
of which 72.5% are new, at an indicative price range of
HK$1.75-HK$2.25 each, according to a term sheet seen by The Wall
Street Journal Tuesday. The remaining shares are offered by current
shareholders--Chairman Wei Qi; his daughter Wei Xiao; Chief
Executive Wei Xuan and the Taiwan consultant Jimmy Chen, according
to the preliminary prospectus.
The price range of Tianhe represents 10.2-13.1 times 2014
forecast earnings, according to a person familiar with the
situation. Its peer NewMarket Corp is trading at 21 times,
according to Capital IQ.
Tianhe, in which Morgan Stanley also has a stake, started taking
orders from investors Tuesday and is scheduled to list on the Hong
Kong Stock Exchange June 20, the term sheet stated.
Bank of America Merrill Lynch, Goldman Sachs Group Inc., UBS and
Morgan Stanley are the joint global coordinators of the deal.
Tianhe came into the spotlight earlier this year after a top UBS
banker was suspended amid an internal probe into the hiring of the
daughter of Tianhe's chief executive, and the Swiss bank's
subsequent work for the company. The banker, Joseph Chee, a
decadelong veteran at UBS and head of global capital markets in
Asia, has since been reinstated, while Joyce Wei, the daughter of
Chief Executive Wei Xuan, remains with the Swiss bank.
Meanwhile, Hanhua Financial Holding is seeking to raise US$304
million in an IPO in the city by selling 1.15 billion shares in a
range of HK$1.55-HK$2.05 each. The price range represents 0.8-1
times 2014 forecast book value of the firm. It is scheduled to list
in Hong Kong on June 19.
It is the Chinese credit-guarantor's second attempted to tap the
IPO market. In March, Hanhua Financial planned to raise up to
US$367 million but it postponed the offering amid worries that
China's growing bad debt and tensions in Ukraine were weighing on
investor sentiment.
Hong Kong, which was the top IPO market from 2009-2011, has been
struggling to keep its top listing destination in recent years.
Chinese pork producer WH Group pulled its US$5.3 billion offering
in late April, while another big IPO evaporated late in March when
retail-chain owner A.S. Watson & Co., which had planned to list
in a US$6 billion deal, was instead partly sold to Singapore's
state investment firm Temasek Holdings Pte.
So far this year, the city has ranked fourth after the New York
Stock Exchange, London Stock Exchange and Nasdaq.
If it materializes, Tianhe Chemicals could be the fourth largest
IPO this year, after the US$3.1 billion offering by HK Electric
Investments, the US$1.2 billion IPO by China CNR Corp. and the
US$1.1 billion IPO by lender Harbin Bank, according to
Dealogic.
Write to Prudence Ho at prudence.ho@wsj.com
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