Tianhe Chemicals, Hanhua Financial's IPO Hopes

By Dow Jones Business News, 
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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 ExchangeJune 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

Subscribe to WSJ: http://online.wsj.com?mod=djnwires


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  06-03-140509ET
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This article appears in: IPOs

Referenced Stocks: GS , NEU , UBS

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