China Investment to plan investment in BBMG's Hong Kong IPO


Updated Mon, 13 Jul 2009 00:00:00 GMT

China Investment Corp., the nation's $200 billion sovereign wealth fund, will invest in cement maker BBMG Corp.'s initial public offering in Hong Kong, said four people with knowledge of the matter.

BBMG, the largest cement supplier in Beijing, marks CIC's second investment in a Hong Kong IPO, one of the people said, declining to be identified as the size of the purchase has yet to be determined. BBMG is raising about $700 million, according to people with knowledge of the deal.

CIC, based in Beijing, will become a so-called cornerstone investor in BBMG, the people said. BBMG's IPO may be the first in Hong Kong in about a year to attract cornerstone investors, who are guaranteed shares in such a sale in return for a commitment to hold the stock for a set period after the company goes public, said three of the people.

Tumbling stock markets and poor performance of IPOs last year deterred investors from agreeing to such lockups. This year's rally in equities and the lower valuations for IPOs are helping renew interest in first-time share sales.

Hong Kong's Hang Seng Index dropped 48 percent last year, making it the worst annual performance since 1973. Six of the companies that have gone public in the city this year have seen their shares rising 15 percent to 40 percent, according to data compiled by Bloomberg.

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There will be four other cornerstone or corporate investors in BBMG's IPO, including Och-Ziff Capital Management Group LLC., China Life Asset Management Co., a company controlled by the Kuok family of Malaysia and BOC Group Investment Ltd., said three of the people.

Hong Kong billionaires, and international and Chinese institutions acted as cornerstone investors in Hong Kong IPOs in 2007. CIC was one of nine corporate investors in the December 2007 IPO of China Railway Group Ltd., which raised $2.9 billion. The $1.7 billion stock offering of Ltd. in November 2007 attracted investors including the Kuok family, Yahoo! Inc. and AIG Global Investment Corp. (Asia).

Wu Xiangyong, BBMG's board secretary, is traveling and couldn't immediately be reached for comment. Wu Xueling, a press officer at CIC in Beijing, and Zoltan Varga, Och-Ziff’s Asia head, couldn't immediately be reached.