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BBMG raises US$768m in HK IPO

BBMG Corp, a building materials maker in China, yesterday raised US$768 million in a Hong Kong initial public offering at the top end of an indicated range, sources said, becoming one of the largest such deals this year and setting a positive tone for other big listings to follow.

State-owned BBMG is selling 933 million shares priced at HK$6.38 (82 US cents) per share amid substantial demand, sources involved with the process said. The indicated range was between HK$5.18 and HK$6.38 per share. The sources weren't authorized to speak publicly about the deal yet.

The heavy demand for shares underscores several themes playing out in Asia right now, among them a surge in equity offerings that have been unleashed since the stock markets took off earlier this year.

BBMG's top-end pricing is a good sign for the block of IPOs preparing to hit the Hong Kong market, several of which are multi-billion offerings.

By raising US$768 million, BBMG ranks as one of the largest IPOs in Hong Kong so far this year, behind the US$1.3 billion raised by aluminum products maker China Zhongwang Holdings in April. While it's a milestone for 2009, IPO volumes and sizes are still well below levels reached 18 months ago.

Another key factor behind BBMG's strong IPO showing is its connection to China's stimulus package. Both the bankers underwriting the offering and the analysts covering it were quick to tie the building material company's "story" to China's support of the industry.

Yet another theme at play is that Hong Kong residents, aggressive when it comes to buying into IPO offers, see cheap prices after nearly a year of little or no activity.

"The market sentiment is very optimistic now and new offerings so far have cheaper valuations. That's why investors are rushing for better bargains," said Li Kwok-suen, a fund manager at Phillip Capital Management.

The IPO has triggered a "claw back," sources said, meaning the retail portion of the demand was more than 100 times over-subscribed. That means an extra portion of the IPO was opened to the retail audience and scaled back for institutional investors.

Beijing-based BBMG is one of the largest building materials makers in China.


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