Pricing an IPO in the week of China’s Lunar New Year – when the nation practically grinds to a halt – never looked the most sensible strategy. Nor did it turn out to be. On Monday, Hongqiao Aluminum pulled its $2.2 billion Hong Kong offering, citing weak market conditions and the falling price of its core product.
It wasn’t a total shock. Hongqiao had already cancelled the retail tranche, but scrapping the entire deal constitutes a considerable setback for the Shandong-based firm.
FinanceAsia points out the company was pitching its stock at a steep discount to Chalco, the country’s biggest listed aluminum firm. The proceeds were designed to add new capacity, a use of funds which regular WiC readers may find strange – on several occasions last year we pointed out that vast overcapacity in the Chinese aluminum sector had dragged Chalco into losses.
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