[photopress:Jinjiang_1_2.jpg,full,alignright]Jinjiang, operator of Shanghai’s Peace Hotel (seen below) and much else, has started pre-marketing itself prior to an IPO.
The state-owned enterprise, which runs budget inns as well as hotels like The Peace Hotel in Shanghai, will be the first purely Chinese hotel operator to list in Hong Kong. This initial offering follows the extremely well-received listing of Chinese budget hotel operator Home Inns & Hotels Management on Nasdaq last month. This showed there is a strong demand for this type of stock and, perhaps, a sparsity of relevant investment opportunities in this sector.
Home Inns’ IPO went out at $13.80 and since its trading debut on October 26 the stock has soared another 145 percent to about $33.90.
When Jinjiang began marketing its $300 million deal yesterday together with joint bookrunners BNP Paribas and UBS $70 million worth of stock had been set aside for strategic and cornerstone investors.
These early buyers are, in fact not now needed and, indeed, in some exchanges would be frowned upon. The brokers have built in problems because they will be hammered by their biggest customers for select deals.
[photopress:peace.jpg,full,alignright]Jinjiang will sell about $30 million worth of shares to the Starwood group, which operates a number of international hotel chains such as the Sheraton, St Regis and Westin. Starwood’s investment should be useful from a business point of view as it will be accompanied by strategic cooperation between the two hotel groups.
The company is looking to sell 1.1 billion new shares, or 25 percent of its existing share capital, ahead of a December 15 listing on Hong Kong’s main board.
Jinjiang is probably best known to international investors for its landmark four and five star hotels. Aside from The Peace Hotel, which is prominently situated on the Bund and has been a Shanghai icon since it was first opened as the Cathay Hotel in 1929, these include the International Hotel and Golden Gate Hotel, which are also located in the heart of Shanghai.
The company was also the first to set up a chain of budget hotels in China and its Jinjiang Inns brand is very well known in the local market.
The company currently owns about 263 hotels in 73 cities with more than 51,000 rooms, which makes it the largest hotel operator in Asia. By comparison, Shangri-La has about 20,000 rooms around the region and Home Inns has 9,700 spread across China.
Source: FinanceAsia.com and wire services.