HONG KONG: China's largest packaging paper supplier Nine Dragons Paper (Holdings) Ltd raised HK$3.4 billion (US$436 million) after pricing its initial public offering (IPO) at the top of an indicated range amid strong demand, sources close to the deal said on Friday.

The company will officially announce the pricing on Saturday. The IPO's retail tranche has been over-subscribed by 576 times, soaking up the market liquidity of nearly HK$200 billion (US$26 million).

Nine Dragons sold 1 billion shares at HK$2.85 (US 37 cents) to HK$3.4 (US 44 cents) each. Ten million, or 10 per cent were available to retail investors. Under Hong Kong's listing rules, the portion allocated to individuals may be increased to 50 per cent if retail subscription exceeds 100 times.

This is the first IPO so far this year to soak up the amount of capital of more than HK$100 billion (US$13 billion). Last year, only China Construction Bank, Bank of Communications and the Link REIT could draw more than HK$100 billion (US$13 billion) during the offering period.

A number of local tycoons, including chairman of Kerry Properties Chairman Kuok Hock-nein, New World Development Chairman Cheng Yu-tung and Henderson Land Chairman and Lee Shau-kee have agreed to buy altogether more than half of the company's shares.

The huge demand of the company's shares also tightened the market liquidity with the overnight Hong Kong Interbank Offer Rate rising by one percentage point to 4.5 per cent.

Riding on the back of feverish market sentiment over new listings, analysts said Nine Dragons would do well on its debut, scheduled for next Friday.

Source: China Daily