Zhong Wang IPO to be marker

The Hong Kong listing of China Zhong Wang, a maker of aluminium products, could raise $1.6bn and become the world's biggest initial public offering since last summer, according to people familiar with the matter.

The planned IPO is easily the largest since the onset of the global financial crisis last September and its progress over the next few weeks will be scrutinised by market participants eager for signs of renewed investor appetite for new issues.

Privately-held Zhong Wang plans to sell 1.4bn shares, or 26 per cent of its enlarged share capital, at HK$6.80-HK$8.80 and could also issue a further “greenshoe” allocation – shares in excess of the original amount offered – depending on investor demand.

If successful, Zhong Wang would become the first company globally this year to raise more than $1bn in an IPO and potentially eclipse the $1.57bn raised by China South Locomotive in August 2008.

Zhong Wang on Monday kicked off a 10-day global investor roadshow and aims to price its shares on April 30, ahead of an expected May 8 listing. It is being advised by UBS, JPMorgan and China's Citic Securities.

According to Thomson Reuters, the biggest listing this year is Mead Johnson, a US paediatric nutrition company, which raised $828m in February on the New York Stock Exchange.

Zhong Wang, based in the north-eastern province of Liaoning, is a leading maker of products such as window frames and railcar components for customers such as China Railway Group.

The company is expected to benefit from Beijing's $585bn economic stimulus package.

The price range values the company at up to 13.5 times forecast 2009 profit, according to people familiar with the matter.

The IPO comes as stock markets show tentative signs of recovery, fuelling a greater risk appetite among investors.