China gets ready for a mega IPO

Posted Apr 21st 2009 11:00AM by Tom Taulli
Filed under: China, Altria Group (MO)

While not attracting many headlines, a variety of major companies have raised large amounts of capital lately, such as HCA, Dole Foods and Altria (NYSE: MO). However, the capital source has been mostly the debt markets.

But as things ease up, might equity investors warm up to new offerings?

Well, we should find out fairly soon. China Zhongwang Holdings Ltd., which is the largest manufacturer of extrude aluminum, is planning a public offering on the Hong Kong stock exchange. The company wants to raise about $1.6 billion. No doubt, it would be the largest equity offering for the year.

Keep in mind that China's government has pumped huge amounts of liquidity into the economy. And investors have responded -- by buying up shares.

Already, there's some evidence of receptivity to public offerings. In the past few weeks, Changyou.com (NASDAQ: CYOU) pulled off a successful IPO. Although, the amount was only about $120 million.

So, the Zhongwang will certainly be a big test of the markets. Yet, the company has shown resilience against the tough economic environment. Then again, the company's focus is mostly on the Chinese market, which has continued to grow. So all in all, the prospects look bright.

The shares are expected to hit the markets on May 8.

Tom Taulli is the author of various books, including The Complete M&A Handbook and the founder of BizEquity, a free online business valuation tool for small businesses.

Tags: CYOU, inthenews, IPO, Zhongwang Holdings Ltd, ZhongwangHoldingsLtd