Cheung Kong's Horizon Hospitality, Two Chinese Firms Aim to Raise up to US$5.3 Billion In Hong Kong IPOs This Month - Sources

11/16/2012| 04:38am US/Eastern

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--Horizon gets HK regulatory OK for up to US$800 million HK IPO, said people familiar with the matter

--Horizon may take orders from investors on Nov. 29, these people said

--Zhengzhou Coal Mining likely to kick off US$500 million IPO roadshow Wednesday

(Recasts lead, adds background of trust listing in Hong Kong in the seventh to 10th paragraphs; Zhengzhou Coal Mining's and PICC's listing plans in the 11-14th paragraphs.)

 
   By Prudence Ho and Yvonne Lee 
 

HONG KONG--Billionaire Li Ka-shing's flagship property firm and two Chinese firms hope to raise a total of up to US$5.3 billion through initial public offerings in Hong Kong before the end of this month, people who have direct knowledge of the offerings said Friday, as the proposed deals might give a shot in the arm to the city's deal-starved market.

On Thursday, billionaire Li Ka-shing's Cheung Kong Holdings Ltd. (0001.HK ) received regulatory approval to list its serviced-suites business in an US$800 million initial public offering in Hong Kong, people with direct knowledge of the deal said Friday.

With the approval from the Hong Kong stock exchange, Horizon Hospitality (Holdings), which has four service-apartment buildings in Hong Kong, plans to start gauging investors' interest on Monday, and is likely to start taking orders on Nov. 29, the people said, adding the timetable could change and is subject to market conditions.

The assets will be structured as a trust, which typically pays dividends from mainly cashflow, and is popular among investors seeking steady and long-term income.

The deal comes as real-estate fund manager ARA Asset Management Ltd (D1R.SG), an affiliate of Mr. Li, pulled its US$778 million yuan-denominated real estate investment trust IPO named Dynasty REIT in Singapore last month, citing weak market conditions and demand. In 2011, Mr. Li listed the first yuan IPO outside mainland China--the US$1.6 billion listing of Hui Xian REIT in Hong Kong.

Mr. Li's serviced-suites trust will cover four Horizon-brand properties in Kowloon and the New Territories, according to a filing in October, when Cheung Kong announced its plan for the IPO. The gross rental area is 3.32 million square feet, spread among 4,833 typically two-bedroom suites.

Like PCCW's trust last year, Cheung Kong's Horizon trust will have units "attached" to shares in a holding company set up for the assets. In such a vehicle, Cheung Kong can circumvent a ban on listing in Hong Kong for trusts that don't hold real estate assets. The relevant authorities have, however, proposed changing the legal framework to facilitate the listing of such trusts.

Mr. Li, Asia's richest man, last year listed the Hong Kong and Shenzhen port operations of his Hutchison Ports unit as a business trust in Singapore, which allows such listings.

After the listing, Cheung Kong and its Hutchison Whampoa Ltd. unit together will hold a stake of less than 30% in the stapled units, Cheung Kong said earlier.

Two other Chinese companies are testing investors' interest for IPOs in Hong Kong. Zhengzhou Coal Mining Machinery Group Co. (>> Zhengzhou Coal Mining Machinery Group Co), which started premarketing for its US$500 million IPO in September, is likely to kick off its roadshow on Wednesday at the earliest. Meanwhile, state-owned People's Insurance Co. (Group) of China Ltd., which plans to raise US$4 billion through its offer, is scheduled to start taking orders from institutional investors next Thursday, other people with direct knowledge of the deal said Thursday.

To increase the success of its IPO, PICC, one of China's biggest insurers by premiums and the parent of Hong Kong-listed PICC Property & Casualty Co., are talking to U.S. insurer American International Group Inc. and China Life Insurance Co. Ltd., China's largest life insurer by premiums, to be cornerstone investors in its IPO, a person familiar with the offering said Thursday.

Cornerstone investors, who normally are guaranteed large allotments of shares in an IPO in exchange for agreeing to hold them for a certain length of time, are seen as key to attracting other institutional and retail investors in an offer.

Bankers said they expect PICC's planned IPO--which could raise up to $4 billion--to end the listing drought in Hong Kong. The value of new listings in the city totaled US$6.2 billion so far this year, the lowest year-to-date level since 2003's US$3.1 billion, according to Dealogic.

Write to Prudence Ho at prudence.ho@wsj.com and Yvonne Lee at yvonne.lee@wsj.com

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