Japanese retail investors buy China Power IPO
(Xinhua)
Updated: 2004-10-11 14:21

Demand from Japanese retail investors for the China Power International Development Ltd.’s initial public offering was overwhelming, with orders worth more than US$4 billion for the US$12.5 million in shares allocated, a source said Friday.

“Japanese investors are convinced that the company has growth potential because of a planned asset injection by its parent company,” said the source, referring to China Power’s plan to acquire further generating assets from its parent, China Power Investment Corp., in what would be a boost to earnings.

Tapping funds worth US$320 million, China Power’s IPO is the smallest among the five Hong Kong-listed companies that have sold their shares to Japanese retail investors so far this year through the Public Offering Without Listing (POWL) program.

POWL is a process regulated by Japanese financial authorities that allows overseas listings to sell their shares to Japanese retail investors.

Impressed by the strong economic growth in China, Japanese retail investors have, since 2002, invested at least US$1.26 billion on a spate of Hong Kong listings through the POWL process.

Although the amount of orders received from Japanese retail investors were well above China Power’s total fund-raising size, Japanese investors have only been allocated 3.8 percent of the mainland power firm’s IPO — the lowest level among recent share sales.

The source said that was because Hong Kong retail investors received a bigger allocation of China Power shares in view of the popularity of the offer, and two big institutional investors alone took up 18 percent of the total offering. The China Power IPO’s retail tranche was 290 times subscribed, the source said.

The boom in POWL listings by Hong Kong firms slowed in the late 1990s, but resumed with the listing of BOC Hong Kong (Holdings) Ltd. in July 2002. Since then, 11 Hong Kong-listed companies have gone the POWL route.

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