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February 24, 2012 9:07 am
Sunshine Oilsands, a Canadian tar sands company, has raised $575m in a Hong Kong initial public offering after pricing its shares at the bottom of the marketed range, according to people close to the deal.
The IPO is the biggest in the world so far this year, according to Dealogic, and comes at a moribund time for new share sales even though stock prices are rallying.
Sunshine, which is backed by Chinese state-owned investors, raised $350m, or 60 per cent of the total amount, from cornerstone investors including China Investment Corp, China’s sovereign wealth fund, and Sinopec Group, the country’s biggest oil refiner.
Cornerstone investors, a common feature of Hong Kong IPOs, get a guaranteed allocation of the share sale in exchange for a commitment not to sell them for at least six months. Typically they take about 20 per cent of a deal.
Sunshine plans to make its stock market debut on March 1.
Philippe Espinasse, author of IPO: A Global Guide, said: “Since it priced at the bottom of the range even though they had such a large cornerstone tranche there’s the possibility that start of trading might be a bit rocky.”
CIC and Sinopec each agreed to buy $150m of shares in Sunshine, according to the company’s IPO prospectus. EIG Global Energy Partners, a US asset manager in which CIC has a stake and which is planning its own Hong Kong IPO, pledged $50m.
Sunshine sold 923.3m shares at HK$4.86 (US$0.63) apiece, said people familiar with the matter. The shares had been offered at a range of HK$4.86 to HK$5.08 each, according to the prospectus.
The company’s decision to float its shares in Hong Kong was noteworthy because its peers have traditionally listed in Toronto, where investors have years of experience valuing unconventional oil deposits.
Bank of China International, Deutsche Bank and Morgan Stanley arranged the IPO.
Based in Calgary, Alberta, Sunshine holds leases to 464,997 hectares of oil sands and plans to use the proceeds of the share sale to fund their development.
Oil sands are composed of bitumen mixed with sand, clay and water. In an expensive procedure, the bitumen must be extracted from the sand using hot water or steam and then processed before it can be fed into a typical refinery.
Sunshine was founded in 2007 by Michael Hibberd, a former financier at ScotiaMcLeod, and Songning Shen, a geologist who has worked at several oil groups including Bohai Company, a subsidiary of Cnooc. Mr Hibberd and Mr Shen are now co-chairmen of the group.
Last March, Sunshine raised C$230m (US$227m) from investors including China Life Insurance and Bank of China Group Investment.
China is the world’s second-largest crude importer, after the US, and its voracious appetite for oil has prompted Chinese companies to invest aggressively in non-traditional oil sources including oil sands, shale oil and gas, and deepwater oil reserves.
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