HONG KONG: Jiangsu Rongsheng Heavy Industry Group Co, the mainland shipbuilder backed by Goldman Sachs Group Inc, may hold a $2 billion Hong Kong initial public offering (IPO) as early as this year amid a revival in investor appetite.

A sale this year is "possible, though 2010 is more likely" as shipbuilding recovers, managing director Zhang Ming said in Shanghai yesterday. The largest private shipbuilder on the mainland delayed plans for an IPO last year amid a stock market plunge and credit crunch.

As many as 100 companies may be reviving Hong Kong IPO plans, according to Goldman Sachs, as investor demand returns following last year's equities rout. Bawang International (Group) Holding Ltd, the largest herbal shampoo maker on the mainland, sportswear maker and retailer 361 Degrees International Ltd and Amber Energy Ltd all gained on their trading debuts in the past few weeks.

Rongsheng also plans to time its IPO to coincide with an anticipated revival in demand for new ships. The company yesterday signed an order for four very large carriers with Oman Shipping Co, which it said was worth more than $480 million. Vale SA will charter the ships to haul iron ore from Brazil to Oman, it said in an e-mailed statement.

The shipbuilder may sell stakes to strategic investors, possibly including shipping lines, before the IPO, said chairman Chen Qiang. Rongsheng raised more than $300 million from institutional investors including Goldman Sachs in 2007, according to a company handout.

Work on the first of 12 bulk carriers ordered by Vale in 2008 is due to start before the end of the year, Chen added. The company will get 20 percent of the payment for the order at that time, he added. So far it has received 30 percent, he said. Vale, the world's biggest iron-ore producer, said last year it would pay $1.6 billion for the 12 ships.

However, shipyards in the country, the second biggest shipbuilding nation in the world, had 152 orders scrapped in the eight months to May and may face more cancellations, the China Association of Shipbuilding Industry said on July 6.

China Daily - Bloomberg News

(HK Edition 07/11/2009 page5)