Rongsheng Preps $1 Billion IPO

SHANGHAI, Aug 4 (Reuters) – Chinese shipbuilder Jiangsu Rongsheng Heavy Industries Co Ltd, which last year attracted investment from big-name private equity, is preparing an overseas IPO to raise at least $1 billion, and maybe double that.

One person familiar with the matter said the firm was looking to raise up to roughly $1 billion in a 2009 listing, while a company source familiar with the matter said the firm aimed to raise more than $2 billion.

The timing of the listing will depend on market conditions, but Rongsheng is proceeding quickly with preparations, the company source added.

“We are a young enterprise established about three years ago, so we cannot provide a financial record that meets the requirements of Chinese regulators for a domestic IPO. But we can try overseas,” the source said.

Chinese shipbuilders, both state-owned and private enterprises, have reaped strong profits in recent years as shipping liners worldwide expanded their fleets amid booming global trade.

Goldman Sachs Group Inc (GS.N: Quote, Profile, Research, Stock Buzz) is helping the private-sector Chinese company with the share offering, the source said. The company is considering the Hong Kong stock market as one option for its IPO, which Goldman Sachs is expected to sponsor, sources familiar with the situation have said.

Goldman Sachs declined to comment.

An investment unit of Goldman Sachs, private investment fund D.E. Shaw and another Chinese private equity fund paid $250 million for a minority stake in Rongsheng last year, the company source said.

Rongsheng, which aims eventually to compete with much bigger state-owned rivals such as Guangzhou Shipyard International Co (600685.SS: Quote, Profile, Research, Stock Buzz) (0317.HK: Quote, Profile, Research, Stock Buzz), is joining many of its peers in seeking to tap capital markets to fund rapid growth, which has been fuelled by China's booming global trade.

On Monday, Brazilian iron ore miner Vale (VALE5.SA: Quote, Profile, Research, Stock Buzz)(RIO.N: Quote, Profile, Research, Stock Buzz) said it commissioned 12 very large ore carriers from Rongsheng. Each carrier will have a capacity of 400,000 deadweight tonnes.

By Alfred Cang
(Additional reporting by Tony Munroe in HONG KONG; Editing by Edmund Klamann & Ian Geoghegan)