China Aluminum International Engineering (also known as Chalieco), a unit of China Aluminum Corporation (Chinalco), launched a scaled-down initial public offering in Hong Kong without bookrunners Morgan Stanley (MS.NYSE) and UBS (UBS.NYSE, UBS.VTX), banks which may have backed out over Chalieco’s dealings with Iran, Reuters reported. The unit had initially planned to tap as much as US$500 million from markets in March, when it signed on Morgan Stanley and UBS. However, concerns emerged about its contracts in Iran, and the potential for US regulatory retribution against the banks. The unit instead used China International Capital Corporation (CICC) and Guangfa Securities for the Hong Kong flotation. Chalieco has been involved in Iranian business since 2005. Most recently, the firm signed a US$4.7 million deal with an Iranian firm in 2010.