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China Tower kicked off its trading debut in Hong Kong marking the world’s biggest IPO in two years

posted onAugust 9, 2018
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China Tower Corp Ltd, the world’s largest operator of mobile telecommunications towers, made its market debut in Hong Kong on Wednesday (Aug. 8).

The Beijing-based company, formed out of the networks of China's three big, state-owned wireless carriers-C hina Mobile, China Telecom and China Unicom- raised $6.9 billion from investors valuing it at nearly $28 billion. 
 
Chinese investment firm Hillhouse Capital Group, U.S. fund firm Och-Ziff Capital Management Group and a unit of Alibaba Group, were among the 10 cornerstone investors who covered 20 percent of the IPO which is the world's biggest listing since Postal Savings Bank of China Co Ltd's US$7.63 billion Hong Kong float in 2016.

Alibaba Group Holding still holds the world record with its US$25 billion New York IPO in 2014 according to data compiled by Dealogic. 

Shares of China Tower traded for the first time at HK$1.26 ($0.1605) each, unchanged from their offer price, even as the telecoms group offered them at the bottom of a price range. Hong Kong's benchmark Hang Seng Index closed up 0.4 percent. 

“I’m very happy that the international offering of our IPO has attracted global long-long funds, sovereign wealth funds and hedge funds as well as high-quality Chinese investors,” China Tower Chairman Tong Jilu said at the open of trading in Hong Kong.

He also noted that the company had just celebrated its fourth birthday. 

China Tower

China Tower says it plans to use about 60% of its IPO proceeds, roughly $4 billion, to build out and improve network infrastructure, another 30%, or about $2 billion, will be used to repay bank loans with annual interest rates between 4.35% and 4.75%  while 10% is for working capital and general corporate purposes. 

As of the end of March, the company's total debt stood at 160.4 billion yuan, of which 70% will fall due within a year, its prospectus showed. That was up from 156.3 billion yuan in 2017 and 140.0 billion yuan in 2016 according to Nikkei Asian Review.

China Tower was formed in 2014. It operates 1.9 million tower sites and had 2.8 million tenants at the end of June. Its operating revenue in 2017 rose nearly 23 percent to 68.7 billion yuan ($10.07 billion), while profit rose more than 25 times to 1.9 billion yuan according to Reuters.

China Tower is the second high-profile Hong Kong IPO to price at the low end in recent weeks, as escalating Sino-U.S. trade tensions weigh on investor sentiment. Last month, Chinese smartphone maker Xiaomi priced at the bottom of its range to raise $4.72bn valuing the company at $54 billion, just half its original $100bn goal. 

Xiaomi was also the first firm in Hong Kong to trade with the controversial dual-class structure. 

Despite the shock waves from a full-blown trade war between the U.S. and China, companies have raised US$22.4 billion in Hong Kong through listings this year, the city's best-ever seven-month performance, Thomson Reuters data showed.

China International Capital Corp. and Goldman Sachs Group Inc. are joint sponsors for the China Tower float while Bank of America Merrill Lynch  and JPMorgan are joint global co-ordinators and joint bookrunners.