Qingdao Haier eyes $464mn from share sale

Chinese home appliances maker Qingdao Haier is looking to raise up to €400mn ($464mn) in the first so-called D-share sale in Frankfurt by a Chinese company.

A Haier listing on the infant China Europe International Exchange (CEINEX) would kick off the D-share project – D is for Deutschland – which aims to attract European investment in Chinese companies.

Haier, already listed in Shanghai, has set a price range of between €1 and €1.5 per share, it said in a filing yesterday morning.

That represents a discount of between 20% and 46% to the company’s Shanghai closing price of 14.95 yuan on Thursday.

The company plans to sell 265mn shares, according to the filing, putting the deal size at €265mn to €400mn.

Total proceeds could potentially reach €457mn if Haier fully exercises a 15% “greenshoe”, or over-allotment, option.

The deep discount to Haier’s Chinese shares was to ensure the first- of-its-kind deal goes well and attracts European investors, a source involved in the deal said.

“You don’t want to end up with egg on your face,” the person said.

CEINEX was set up with the blessing of Beijing and Berlin in 2015 and is mostly owned by Shanghai Stock Exchange (SSE) and Deutsche Boerse.

The establishment of D-shares marks the latest in a series of gradual moves by China to increase foreign engagement with its companies, albeit often at a distance.

Chinese brokerage Huatai Securities Co last month said it plans to list in London, potentially becoming the first Chinese company to sell shares under the long-awaited ShanghaiLondon Stock Connect.

D-shares also join a long list of offshore Chinese forms of equity including H-shares and red-chips in Hong Kong, S-chips in Singapore and Nshares in New York.

Qingdao Haier is China’s top household appliances maker and in 2016 acquired General Electric Co’s appliance business for $5.4bn.

Haier will open books for the share sale on Monday and close them on Wednesday. Its D-shares will start trading on October 24, according to the filing. It said it intends to use the proceeds to fund its acquisition of Italian home appliance maker Candy SpA and to promote the Haier brand and the company’s international growth with a focus on Europe.

Haier secured three cornerstones, Silk Road Fund, Camry Investment and Rechi Precision Co Ltd, who together committed to buy up to €162.5mn worth of shares.

Deutsche Bank is the sole global coordinator for the listing.

It’s also among the joint bookrunners with CICC, JPMorgan and UBS.