BizAims

China Zhongwang Holdings, Asia's biggest maker of aluminium extrusion products, began marketing on Monday for a Hong Kong IPO to raise as much as $1.58 billion in what would be the world's largest new listing so far this year.

The company  is a beneficiary of Beijing's 4 trillion yuan ($585 billion) economic stimulus package, a big chunk of which is being spent on infrastructure.

The offering is the biggest test yet of investor appetite for new listings since the global meltdown in markets last year, and the fund-raising target is higher than the roughly $1 billion that the company and its bankers had previously considered.

Zhongwang, a private sector company based in Liaoning  province, plans to sell 1.4 billion shares, or nearly 26 percent of its enlarged share capital, at HK$6.80-HK$8.80 each ahead of a May 8 trading debut, two sources with direct knowledge of the deal said on Monday.

The price  range values Zhongwang at 10.4 to 13.5 times forecast 2009 profits, according to one of the sources, and at the high end would make the company worth about $6.1 billion.

China Railway Construction Corp Ltd (1186.HK) (601186.SS) trades in Hong Kong at 19.4 times forecast 2009 earnings, while China Railway Group (0390.HK) (601390.SS), the country's largest rail and highway builder, trades at about 18.4 times forecast 2009 earnings.

Andy Mantel, managing director of Greater China-focused hedge fund Pacific Sun Investment Management, said Zhongwang's IPO is "a big offering, and not cheap."

Mantel, who bought shares in the last Hong Kong IPO, by Chinese liquor and cigarette distributor Silver Base Group (0886.HK), was among the roughly 250 people to attend an investor luncheon at the Four Seasons hotel in Hong Kong on Monday and said he has not yet decided whether to seek Zhongwang shares.

If successful, Zhongwang's IPO could be the first to raise more than $1 billion since China South Locomotive (1766.HK) (601766.SS) raised $1.57 billion last August.

Global IPO volumes have dropped nearly 96 percent so far this year, according to Thomson Reuters data, but the market rally of recent weeks has led several companies to revive listing plans.

The world's biggest listing this year was the $828 million February IPO by Mead Johnson Nutrition Co (MJN.N).

Hong Kong's Hang Seng index .HSI is up about 39 percent from an early March low, and trading volumes have surged in recent weeks, bolstering conditions for Zhongwang's big IPO.