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Chinese auto finance company prices Hong Kong IPO

Shanghai Dongzheng Automotive Finance Co. Ltd. priced its IPO on the Hong Kong stock exchange at HK$3.06 per share, below the low end of the indicative range of HK$4.20 to HK$6.30 apiece, and delayed the listing to April 3 from March 26.

The China-headquartered company said March 25 that the new listing date is subject to the satisfaction of certain conditions. Shanghai Dongzheng Automotive Finance is a unit of China ZhengTong Auto Services Holdings Ltd., and the IPO is a spinoff from the parent.

Under the IPO, the company is selling a total of 533,336,000 shares, which comprise 53,334,000 shares for the public in Hong Kong and 480,002,000 shares for international investors. The international offering includes 26,675,462 shares reserved for qualifying shareholders of China ZhengTong Auto Services. It may also issue up to 80,000,400 additional shares as part of its over-allotment option to cover over-allocations in the international offering.

Assuming the overallotment option is exercised in full, China ZhengTong Auto Services will hold a 68.67% stake in Shanghai Dongzheng Automotive Finance after the IPO.

The company plans to use the IPO's net proceeds to strengthen its capital base to support the ongoing growth of its business.

China International Capital Corp. Hong Kong Securities Ltd., Credit Suisse (Hong Kong) Ltd., Morgan Stanley Asia Ltd. and Morgan Stanley & Co. International plc are serving as joint book runners for the IPO, while China International Capital Corp. Hong Kong Securities, Credit Suisse (Hong Kong) and Morgan Stanley Asia Ltd. are acting as joint global coordinators.

Shanghai Dongzheng Automotive Finance provides loans to auto dealers. In 2018, it disbursed 6.11 billion yuan of retail loans for the purchase of luxury-brand cars.

As of March 22, US$1 was equivalent to 6.72 Chinese yuan.