China Tower’s initial public offering is sending the right signals. The mobile-mast giant has set a fair price range for its Hong Kong IPO, which could raise nearly $9 billion, according to Reuters. It has also limited the amount of stock sold to so-called cornerstone investors, attracting more than just friends and family. That’s a refreshing change from the usual way Chinese state-owned entities are dumped in Hong Kong. The last jumbo IPO of a state-owned entity was in 2016 when Postal Savings Bank of China raised over $7 billion.
That’s why the latest offering stands out from the crowd. Cornerstones have only been allotted 16 percent of the offer. This should help liquidity when the company debuts in August as anchor investors are typically locked up for six months, meaning limited shares are available for trading if they buy most of the stock.
Meanwhile, the price range values China Tower at 6.5 to 7.3 times estimated 2019 EBITDA, according to Thomson Reuters publication IFR. That looks inexpensive compared to India’s Bharti Infratel and Indonesia’s Tower Bersama, which trade at 7.6 and 10 times, respectively. Reasonable pricing will help the cornerstone roster attract respected institutional outfits, including Chinese investment firm Hillhouse Capital and U.S. hedge fund Och-Ziff.
July 26, 2018
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