SEAVI Advent- and Apollo-backed company plans $250m IPO

Shengli Oil & Gas is the latest in a series of private equity-backed companies planning to list on the Hong Kong Stock Exchange.

Shengli Oil & Gas Pipe Holdings, a portfolio company of private equity firms Apollo Asia and SEAVI Advent, intends to raise up to HK$1.94 billion ($250 million; €168 million) via an initial public offering (IPO) on the Hong Kong Stock Exchange.

Apollo and SEAVI Advent currently hold a combined stake of 15.06 percent in Shengli; it is unclear if thei firm's stake will be diluted or sold completely. SEAVI Advent declined to comment. Apollo Asia could not be reached for comment at press time.

The IPO comprises 720 million shares at a price range of between HK$1.81 and HK$2.69 per share, according to a source close to the process. Pricing will be decided on 11 December. Of the issue, 83.3 percent will be primary shares and 16.7 percent will be secondary shares sold by company’s chairman, the source added. The stock will start trading on 17 December, according to Bloomberg reports. 
Shengli, which has prodcution facilities based in Rizhao and Shandong, is the only privately-owned oil and gas line pipe manufacturer in China. It designs, manufactures and services 'spiral submerged arc welded' pipes, which are used to transport products including crude oil, refined petroleum products and natural gas. The company booked revenues of RMB1.8 billion ($264 million; €177 million) for the six months ended 30 June 2009, according to a preliminary offer document. 

The capital raised from the IPO will be used to expand production capacity, according to the source close to the IPO process. Shengli also intends to diversify its product offerings to include longitudinal submerged arc welded and electric resistance welding pipes, the offer document noted.

The past two months have seen the IPO window reopen in Hong Kong. Amongst other private equity-backed companies to line up for flotation have been Chinese wind power generator China Longyuan Power Group, which raised approximately HK$17.5 billion from its IPO last week, according to media reports. Chinese sovereign wealth fund China Investment Corporation and a private equity vehicle controlled by American investor Wilbur Ross invested $400 million and $100 million in the company respectively before its public issue, according to Longyuan’s prospectus.

In the same week, Chinese department store operator PCD Stores, in which 3i has a stake of 9.54 percent, announced plans to raise $3 billion via an IPO. THe UK-based private equity firm plans to divest its holding in PCD in the IPO, sources told Bloomberg.

In October, Baring Private Equity Asia portfolio company Yingde Gases raised HK$3.16 billion. Baring Asia holds a 12.77 percent stake in the Chinese industrial gas supplier following its IPO.

Singapore-based SEAVI Advent, the Asian affiliate of global private equity firm Advent International, closed its fifth fund SEAVI Fund V on $178 million in January, falling short of its $200 million target.

Apollo Asia is part of global alternative asset manager Apollo Global Management. The firm is preparing to list itself on the New York Stock Exchange, according to a report in the Financial Times. Apollo would be the third private equity firm to list on the exchange, following The Blackstone Group and Fortress Investment Group.