China Netcom's initial public offering (IPO) was five times over-subscribed before its roadshow in the United States, reliable sources close to the deal revealed yesterday.

The company officially launched its IPO on November 4 in Hong Kong, the largest telecoms issue from Asia this year.

"After the roadshow in Europe, the IPO's international placement was over-subscribed five times," the source told China Daily yesterday, who wished to remain anonymous.

China Netcom has been drumming up investor interest with roadshows in Asia, Europe and North America.

The shares are set to begin trading in New York on November 16 and November 17 in Hong Kong.

According to China Netcom's prospectus, it is selling a total of 1.046 billion shares. The price of each share was set at an indicative range of HK$7.8-8.91 (US$1-1.15). In Hong Kong, the company is expected to sell 104.6 million shares.

Over-subscription helped allay investors' worries that China Netcom may further reduce the amount that it aims to raise on the capital market with the exposure to the unfavourable market factors such as the gloomy market performance and the negative influence of the recent oil price rise.

In fact, before China Netcom's roadshow, many analysts said that China Netcom faced a tougher environment compared to what China Telecom's IPO experienced in November 2002.

"We had a very tight schedule as institutional investors showed increasing interest in meeting the company's leadership," the source said.

Reports also said China Netcom's shares have been subscribed by many industry giants such as Li Ka-shing, chairman of Cheung Kong (Holdings) Ltd and Hutchison Whampoa Ltd; Lee Shau-kee, chairman and managing director of Henderson Land Group and Cheng Yu-tung, chairman of New World Development Co Ltd.

Analysts believe that the board and the experienced management team of China Netcom help China Netcom convince its investors.

For example, China Netcom has named Rupert Murdoch and John Thornton as non-executive directors.

Murdoch, chairman and chief executive of News Corp, is also chairman of Netcom's compensation committee. Thornton, a former co-president of Goldman Sachs Group, is a member of Netcom's audit and compensation committee.

China Netcom, the second largest fixed-line operator is dedicated to become an influential regional telecommunications service providers and reaching out to major cities in Asia.

By the end of June, it had recruited more than 77.6 million fixed-line subscribers and 4.2 million broadband users.

Source: China Daily