End of an era? Investors exiting from hedge funds

Value Partners Investors Raise $374 Million in IPO (Update1)

By Bei Hu

Nov. 14 (Bloomberg) -- Value Partners Group Ltd. priced the first Hong Kong initial public offering of an asset manager at the top end of a range, allowing two investors to raise HK$2.9 billion ($374 million), two people familiar with the sale said.

The Hong Kong-based company, ranked by Alpha magazine as Asia's second-biggest hedge fund manager by the amount of assets it oversees, priced the 381.6 million IPO shares on sale at HK$7.63 apiece, said the people, who declined to be identified before an official statement.

The IPO consists entirely of existing stock on sale from JH Whitney III LP and Value Holdings LLC, two U.S. private equity investors that bought shares of Value Partners before the public offering. The sale of a 23.9 percent stake in the company gives the manager of retail, hedge and buyout funds a market value of $1.6 billion.

Ping An Insurance Group (Group) Co., China's second-largest insurer, paid HK$1.1 billion for a 9 percent stake in the asset manager, according to Bloomberg calculations based on information provided in a share sale document. Value Partners managed $5.7 billion of assets at the end of June, according to the document.

Strong Demand

Investors are buying into a company which expanded assets under management 10-fold in the 14 years since its inception under the leadership of Chairman and Chief Investment Officer Cheah Cheng Hye.

Value Partners has benefited from the growing demand for asset management services as a result of aging populations, growing wealth and stock booms in Hong Kong and China. The fund manager specializes in picking small- to medium-sized companies.

``They have built a nice company which is very profitable at the moment,'' said Sebastiaan de Bont, who manages $2 billion at Fideuram Asset Management in Dublin, which didn't buy the stock yesterday before the pricing. He voiced concern whether Value Partners could repeat its growth last year in a market downturn, because of its reliance on performance fees charged on excess returns.

JPMorgan Chase & Co. and Morgan Stanley arranged the sale.

Teresa Yu, a Hong Kong-based spokeswoman for Value Partners, Marie Cheung, a JPMorgan spokeswoman in Hong Kong, and Nick Footitt, a spokesman for Morgan Stanley in Hong Kong, declined to comment.

Microcap listings in Singapore

Stamford Law Corporation
Singapore: SGX Revamps SESDAQ Alternative Investment Market (AIM) equivalent listings in Singapore
30 October 2007
Article by Suet Fern Lee

On 23 May 2007, the Singapore Exchange (the “SGX”) released a public consultation paper on changes to its listing rules and its two boards. The proposal is to transform SESDAQ into a sponsor-supervised regime, introducing a model similar to London’s Alternative Investment Market, which has met with significant success. This change is aimed at promoting investor confidence and attracting smaller and fast-growing companies, local as well as foreign, to list on the SGX. Besides the proposed changes to SESDAQ, the SGX will also revise the entry criteria to the Main Board which will focus on the larger and more established companies, creating a clear delineation between the two boards. This is emphasized by a market capitalization limit of S$150 million at the point of the initial public offering (“IPO”) of the listing applicants for the new board.

Under the new board, there is neither a requirement for an operational track record nor any financial entry criteria for all listing aspirants. They will instead be supervised by independent sponsors which will be corporate finance firms or investment banks. These sponsors will decide on the suitability of the company for listing and will review the entire admission and IPO process. Market quality will be maintained by the SGX’s direct regulation over the sponsors via stringent admission and on-going obligatory rules. The additional requirement of continual sponsorship post-listing will help ensure that the companies have guidance in their early years and maintain minimum standards throughout listing.

Another significant change for the new board is that listing aspirants will no longer have to issue a prospectus. Instead, the companies will have to produce an Offer Document, which, as proposed by the SGX, will not have to be registered with the Monetary Authority of Singapore (the “MAS”). In a mirror of the lodgement process for prospectuses with the MAS, the Offer Document will be publicly posted on the SGX website two weeks prior to the listing, for public comment. The disclosure requirements for an Offer Document are proposed to be that of the same as that currently applicable, and the contemplation is for prospectus liability under current securities laws to apply to the Offer Document. The expectation is that this would shorten the listing process and facilitate new IPOs for the new board. It is also believed that handing the admission and IPO process over to sponsors will reduce costs for the IPO aspirant and also minimize the risk of an IPO being aborted.

For existing SESDAQ companies, there will be a transition period of at least two years for them to appoint sponsors and comply with the new rules. The SGX also intends to waive listing fees for three years commencing from the adoption of the new rules by existing SESDAQ companies as an added incentive.

We believe that the new changes signify a bold new direction for the old SESDAQ. We are greatly excited about the potential of this new board and will be looking to actively participate in the development of this new market. The consultation paper is available on www.sgx.com from 23 May 2007 to 20 June 2007.

Chinese shipbuilders raising more equity - anticipating slower order books?

Chinese shipbuilders plan IPOs
By Raphael Minder in Hong Kong and Jamil Anderlini in Beijing
Published: October 31 2007 22:03 Last updated: October 31 2007 22:03

(FT) At least seven Chinese shipbuilders are planning share offerings, underlining China's efforts to build up its domestic fleet and branch out into the construction of more advanced vessels. The largest of the anticipated initial public offerings is likely to come from state-owned China Shipbuilding Industry Corporation (CSIC), which wants to raise about $900m on the Chinese mainland A-share market, according to bankers familiar with the situation. The other major state-owned shipbuilder, China State Shipbuilding Corporation (CSSC), is considering a share sale in Hong Kong. The companies refused to comment.
Meanwhile, five privately owned shipbuilders – Jiangsu Rongsheng Heavy Industries, Sinopacific, Mingde Nantong, Yantai Raffles Shipbuilding and JES International – are also looking to sell equity in order to fund their expansion, according to people familiar with the situation. Sinopacific and Mingde confirmed they have IPO plans but refused to give details.
Chinese shipbuilders want to raise capital at a time when shipping activity is close to an all-time high. The Baltic Dry Index, a key measure of commodity shipping costs, has more than doubled in the past year. Gilbert Feng, assistant director of the Hong Kong Shipowners' Association, who visited China's two major state-owned shipbuilders, said: “New building orders are already full until 2010, so their executives certainly sound very confident.”
JES will begin its roadshow next week and is set to float in Singapore as early as the end of November, trying to raise as much as $300m from a share sale managed by ABN Amro. Sinopacific is hoping to raise about $660m next year in an IPO managed by Citic. Meanwhile, Chen Qiang, president of Rongsheng, said in April his company was planning to sell as much as 25 per cent of its equity in an IPO. However, Rongsheng is now in talks with private investors about selling a stake ahead of a IPO. Finally, Mingde has selected Deutsche Bank and Morgan Stanley to manage a listing in either Singapore or Hong Kong. The banks involved in the plans would not comment.
China recently overtook Korea, the world's leading shipbuilding nation, for the first time in terms of one specific measure – first-half ship orders in terms of deadweight tonnage. CSSC's goal is to double its shipbuilding output over the five years to 2010.

DP World to IPO in Dubai Exchange

DP World of Dubai to Make an Initial Offering

(Dealbook, Oct 22) DP World confirmed Sunday that it will sell 20 percent of its shares, worth at least $3.5 billion, next month in what will be the Middle East’s largest initial public offering.

The sale of shares in the Dubai government-owned company is expected to usher in a series of billion-dollar initial public offerings, as the ruling Maktoum family of Dubai sells off stakes in its business empire, which spans fields like air transportation, real estate and banking.

DP World became the world’s third-largest port company after its acquisition of the British-based Peninsular and Oriental Steam Navigation Company for $6.8 billion in 2006. Political opposition in the United States forced DP World to sell terminals it had acquired in America through the purchase.

The initial offering will be the biggest to be tried in the Middle East, beating the $2.7 billion share sale of the Saudi Telecommunications Company in 2002 and the $1.8 billion offering by the Saudi Kayan Petrochemicals Company this year.

The issue will open for retail buyers on Nov. 4, closing on Nov. 15. Institutional investors will be able to bid for shares up to Nov. 21. The initial offering is intended as a book-building issue, which allows the market to determine the price, within a range.

The listing could invigorate the Dubai International Financial Exchange, known as DIFX, which has struggled to attract interest since the exchange was started in 2005 as part of a plan to make Dubai a financial center to rival Hong Kong, New York and London.

“DP World is definitely an anchor listing, and so will help attract more anchor listings and will also allow smaller companies to increase their visibility on the DIFX,” Per E. Larsson, chief executive of Borse Dubai, the parent of the exchange, told reporters.

DIFX will be rebranded as Nasdaq DIFX after it and the Nasdaq Stock Market entered into a complex ownership deal last month in a bidding war for the Nordic exchange operator OMX.