Hong Kong prepares for biggest IPOs of the year

Two Chinese state-owned firms will hold initial public offerings with a combined value of $3.6 billion in the biggest such deals in Hong Kong this year, a report said Monday.

A unit of oil giant Sinopec Engineering and brokerage China Galaxy Securities will raise $2.24 billion and $1.36 billion respectively with their IPOs, Dow Jones Newswires reported.

The Asian financial hub was the world's top IPO venue from 2009 to 2011, but took a hit after Chinese companies grew worried about slow economic growth last year.

The deals will be the largest since Chinese insurer PICC raised $3.1 billion with its December IPO, the city's biggest share sale in 2012, amid choppy global market conditions.

Sinopec Engineering, the refining and petrochemical engineering unit of state-owned Sinopec, will sell 1.33 billion shares at between HK$9.8 ($1.26) and HK$13.1 each.

The firm has accumulated $350 million from seven cornerstone investors, which include China Aerospace Investment Holdings Ltd. and China Shipping Co., among other companies.

Cornerstone investors are given the option to buy vast portions of stock in an IPO if they agree to hold the shares for a certain period.

China Galaxy Securities, the nation's sixth largest brokerage by sales, has already attracted strong interest from investors for its $1.36 billion IPO expected in Hong Kong this month, Dow Jones reported.

The institutional tranche, which accounts for 90 percent of the IPO, was fully sold, Dow Jones Newswires cited sources as saying.

Galaxy Securities will be selling the remaining 10 percent of its shares to retail investors later this week.

The brokerage secured $280 million from its six cornerstone investors, including $50 million from Asian insurance giant AIA Group and $100 million from a Malaysian government investment holding arm, Khazanah Nasional Bhd.