On March 17, Far East Horizon Co., Ltd., a financial leasing company under the central enterprise Sinochem Group, announced that it would conduct an initial public offering (IPO) in Hong Kong with a maximum financing of HK $ 5.549 billion. It plans to list on the Hong Kong Stock Exchange on March 30.
Far East Horizon plans to issue 816 million shares, of which 10% will be publicly offered in Hong Kong and the remaining 90% will be offered internationally. The offering price of new shares ranges from 5.2 to 6.8 Hong Kong dollars per share. CICC Hong Kong, Morgan Stanley and UBS are the joint global coordinators and joint sponsors of the transaction.
Kong Fanxing, CEO of Far East Horizon, said, "Far East Horizon has a unique business model that makes money by providing integrated financial leasing and consulting services. We are not loan sharks, and 68% of our customers are repeat customers." Kong Fanxing also serves as Sinochem Assistant to the President of the Group.
6 major investors subscribed for $ 250 million
Far East Horizon is the first mainland financial leasing company planning to list in Hong Kong, focusing on financial leasing, consulting and trading businesses in six industries including medical, education, infrastructure, shipping, printing, and industrial equipment. An investment bank person involved in the transaction said that the company was incorporated in Hong Kong and that this status would facilitate future financing arrangements.
Under the big tree is a good place to cool off. Yang Lin, non-executive director of Far East Horizon, emphasized on the 17th that the company has sufficient unused credits. In the current austerity environment, major shareholder Sinochem Group will also use the group's influence to obtain bank support for Far East Horizon. Another identity of Yang Lin is the chief accountant of Sinochem Group.
Since 2002, Far East Horizon has obtained loan financing from 60 domestic and foreign financial institutions. The average term of each bank financing is 2.4 years. As of the end of September 2010, the proportion of outstanding loan balances obtained by Far East Horizon from the four major banks, stock banks, city commercial banks and rural commercial banks, China Development Bank, and foreign banks were 21.7%, 29.5%, 8.1%, and 20.4%, respectively. And 20.3%.
According to the prospectus, Far East Horizon ’s strategic investors also include: asset management company KKR with assets of US $ 61 billion, Singapore Government Investment Corporation (GIC) and CICC. After the IPO is completed, Sinochem Group will hold 47.6% of Far East Horizon's shares, KKR will hold 13.13%, and GIC will hold 7.87%.
In fact, the recent fluctuation of the Hong Kong stock market due to factors such as the Middle East situation and the earthquake in Japan is not a good time for an IPO. However, Far East Horizon still attracted 6 weighty basic investors, buying a total of 250 million US dollars in shares, with a lock-up period of 6 months.
According to the prospectus information, the investment amounts of these six basic investors are: Gaoyuan Capital Management Company US $ 50 million, Owl Creek investment US $ 40 million, OZ Funds investment US $ 30 million, Yongjin Asset Management Company US $ 50 million, Sun Hung Kai Properties USD 30 million, Value Partners Fund USD 50 million.
SME risk control
Far East Horizon plans to use 30% of the proceeds from the IPO financing for working capital and leasing business in the shipping industry, and 70% for medical, educational, infrastructure and printing working capital.
Kong Fanxing believes that under the 12th Five-Year Plan, the company will generate huge financing needs in the above six key areas.
As of September 30, 2010, its customers exceeded 3,200, especially in the high-growth regions of the Bohai Rim, Yangtze River Delta, Pearl River Delta, and China. More than 80% of the customers were SMEs, and the rest were large enterprises.
Kong Fanxing said that although most of them are SMEs, they can control financing risks according to the situation of different industries. From 2007 to the first nine months of 2010, Far East Horizon's non-performing asset ratios were 1.7%, 1.9%, 1.2% and 0.73%, respectively, which remained low.
The data shows that the net profit of Far East Horizon increased from 31 million US dollars in 2007 to 69 million US dollars in 2009, with a compound annual growth rate of 50%. As of the end of September 2010, net profit reached 77 million US dollars, a year-on-year increase of 65%.
As of the end of 2009, there were 164 domestic financial leasing companies, including 17 bank-based leasing companies, 43 vendor-based leasing companies, and 104 independent third-party leasing companies.
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