China aluminium firm on track for year's biggest IPO

A Chinese maker of aluminium extrusion products is on track to raise some 1.6 billion dollars in this year's largest initial public offering (IPO), a news report said Friday. The international tranche of the IPO by China Zhongwang Holdings was heavily oversubscribed, with one investor alone bidding for shares valued at 200 million dollars, the Hong Kong-based Standard newspaper said.

Zhongwang said in a statement that it plans to offer 1.4 billion Hong Kong-listed shares at between 6.80 Hong Kong dollars (0.88 US dollars) and 8.80 Hong Kong dollars each.

The IPO, which opened to retail investors on Friday, could raise up to 12.32 billion Hong Kong dollars.

Some analysts have interpreted Zhongwang's decision to proceed with the IPO as a sign of recovery in global financial markets.

Zhongwang mainly makes aluminium products for use in cars, railway carriages, ships and planes.

In its statement, the company acknowledged that Chinese government measures to bolster the economy through spending on infrastructure had played an important part in its expansion plans.

"The rapid development of industries and infrastructures in mainland China and the unprecedented allocation of resources by both the central and local governments into transportation and infrastructure sectors ... boost the long-term demand for industrial aluminium extrusion products, creating immense growth potential for the industry," Zhongwang said.

China is the largest market for aluminium extrusion products, accounting for 39 per cent of the global market in 2007.

Zhongwang is Asia's largest firm in the sector and the third-largest firm worldwide.

It has has forecast net profit of of at least 1.35 billion yuan (198 million dollars) for the first half of this year, the newspaper said.

CITIC Securities, JP Morgan and UBS are handling the IPO, which will represent 26 per cent of Zhongwang's expanded share capital.

Zhongwang said it plans to use cash from the IPO for research and development, expansion of production and debt payment.

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