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China Netcom Group Corp. (Hong Kong) Ltd., China's second-biggest fixed-line phone company, raised US$1.14 billion in an initial public offering (IPO) Wednesday to expand and upgrade its telecommunications systems and pay bank loans.
Netcom sold 47 million American depository shares (ADS) at US$21.82 each, Goldman Sachs Group Inc. said. That's in the middle of a price range of US$20.24 to US$23.12 earlier disclosed in a Securities and Exchange Commission filing in the United States. Each ADS represents 20 shares. Netcom also sold 104.6 million shares in Hong Kong at HK$8.48 each, com-pared with a range of HK$7.88 to HK$9 a share earlier offered to investors.
The Beijing-based company, which has 77.6 million fixed-line subscribers in China, lured investors to the third-biggest Chinese IPO this year with higher dividends and a cheaper price relative to earnings than rivals. The price represents 9.2 times its forecast 2004 profit, compared with 10.4 times at its biggest rival China Telecom.
"It's a good short-term investment given its better dividend yield and lower valuation,'' relative to China Telecom, said Winson Fong, who helps manage US$2.4 billion at SG Asset Management in Singapore.
Hong Kong individual investors ordered about 28 times the shares available to them and institutional investors ordered about 17 times, bankers involved in the sale said, asking not to be identified. Netcom will now allocate 30 percent of its shares to the Hong Kong public, up from 10 percent, to cater for the demand.
China International Capital, Citigroup Inc. and Goldman managed the IPO.
(Shenzhen Daily November 11, 2004)
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