Date: 2013-07-31

Shanghai Electric Files Subsidiary IPO

Shanghai Electric Group Corp. (China, state-controlled; HK: 2727) said it intends to offer shares in another subsidiary via an IPO on the Hong Kong exchange.

The company, Shanghai Prime Machinery, will reportedly attempt to get as much as USD $163 million from a public share offering of 600 million new shares. The offering represents 44% of the ownership.

In a nod to the demand for foreign investment capital, 90% of the shares are being marketed to investors outside China. Pricing will be set April 21, after the subscription period.

Shanghai Prime is made up of several Shanghai Electric companies, manufacturing bearings, screws, fasteners, turbine blades, wire and wire rope. Most of the company's products are sold within the PRC; IPO financing is expected to strengthen its ability to pursue export sales opportunities.

The company's bearing manufacturing operation is SBC Group, or SBC Shanghai Bearing, established in 1958 and consisting of five different bearing manufacturing operations employing over 5,000 workers. The company's bearings are sold into automotive, rail, electric motor, appliance, and industrial equipment markets worldwide. Although domestic demand still accounts for a majority of bearing sales, export sales are expanding quickly.

Along with finished bearings, SBC also produces bearing components, including balls, rollers, and needle rollers. It was the first bearing manufacturer in China to achieve ISO 9002 certification.


In early 2005, Shanghai Electric raised almost $650 million from a public share offering, although it remains primarily state-owned and state-controlled.

Credit Suisse, which handled the 2005 IPO, is also handling the Shanghai Prime IPO.

So far, advance orders indicate the Shanghai Prime IPO will be oversubscribed by hundreds of percent, showing the strength of the equity market for manufacturers in China.

Shanghai Prime Machinery will make its debut on the Hong Kong stock exchange on June 27, 2006.

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