November 22 2006 - China's Global Bio-chem Technology Group (GBT) is reported to be seeking a separate listing for its corn sweetener unit, a move that could raise as much as HKD 400 million (USD 51 million) from an initial public offering.
The spin-off could raise as much as HKD 600 million (USD 77 million) ‘if the company adopts an aggressive pricing strategy’, according to what the South China Morning Post describes as ‘market sources’.
The paper says that Goldbank Capital, a Hong Kong investment bank, has been picked as the ‘lead sponsor’ of the deal. The deal was originally slated for 2006, but GBT is understood to be holding out for a better valuation of the company’s stock, which has fallen 14% this year compared with the 27% gain in the Hong Kong benchmark index.
A fund manager at what the South China Morning Press describes as a ‘European asset management firm’ said that a spin-off could ‘help GBT to build up a fair valuation as the stock has been undervalued for a long time.’
Corn sweeteners accounted for 14% of GBT’s total sales by volume and 10% by value in 2005. GBT hopes that sweetener sales will account for 20% of overall sales ‘over time’, the reports say. The company’s annual corn sweetener production capacity is 720 thousand tonnes.
FLEXNEWS asked GBT to comment on the reports, but no spokesperson was made available.