China to book record media IPO (

2 September 2012 17 h 12 min Comments Off

China Education Publishing & Media Group is expected to raise around Rmb10bn (US$1.57bn) in, what would be, a record IPO for the country’s media sector. CEPMG, one of China’s biggest state-owned publishing companies, is going ahead with its float, despite weak equity market conditions.

The fundraising target does look ambitious. Market conditions have left more than 700 IPO candidates waiting in line for listing approvals from the China Securities Regulatory Commission, and those already given the all-clear have found investors generally unwilling.

Furthermore, there is no sign that the regulator will remove its unofficial fundraising cap of Rmb5bn in the near term.

However, the media sector may prove an exception. Bankers on the deal believe that strong government support to take publishers public and the sound financial fundamentals of CEPMG, the largest education publishing group in China, mean the company can definitely raise its target, if approved.

“The size can even exceed Rmb10bn, if market conditions are favourable,” said a banker on the deal.

CEPMG is understood to be planning to file its Shanghai IPO application to the CSRC before the end of the year, through sponsor BOC International (China).

The proposed landmark transaction is set to mark another important step for China’s reform of its media and publication sector.

In China, the government controls all major media companies. The Chinese Government started to reform the sector in 2009, consolidating small companies into big players and pushing them to go public in a bid to raise their competitiveness and corporate-governance standards.

Strong demand

Past experience has shown that investors like media stocks, and the strong aftermarket performances of several media companies this year have further fuelled appetites.

., the online news portal of Chinese state-owned newspaper People’s Daily, raised Rmb1.38bn in April. The amount raised was more than two and a half times the portal’s original target. Nevertheless, the share price doubled within a month of listing and is currently 75% above issue.
. Jishi Media, which listed in February this year, also soared 87% on its trading debut.

“Media companies, especially those with very close relationships with the government, are definitely welcome candidates in the domestic IPO market,” said a fund manager. “There’s no way we will not look at those IPOs if any of them come next year.”
Bankers are equally optimistic about the media sector. “The whole cultural and media industry in China is undergoing rapid development. The government aims to build the industry as a major pillar of the economy,” said a senior banker focusing on the media sector. “From the offering prices of media companies in the past several years, we can see the sector enjoys a much higher valuation in the domestic market, compared with listing in overseas markets,” he added.

More to come

In addition to CEPMG, the other three large state-owned publishing companies in the mainland, China Science Publishing & Media Group, China Publishing Group, and China International Publishing Group, are all mulling domestic listings.

. CSPMG filed its Shanghai IPO application in late June. The company is said to be looking to raise about Rmb3bn–Rmb5bn. BOC International (China) is sponsor of the deal, and Citic Securities is understood to have a joint bookrunner’s role.
. Meanwhile, CPG, which completed its restructuring in December 2011, is expected to file its Shanghai IPO application as early as the year’s end.

Established in December 2010, CEPMG was formed from the People’s Education Press, the Higher Education Press, and the Language and Culture Press, three major publishers of textbooks and reference books for schools and colleges, as well as the China Education Publications Import & Export Corp and China Educational Instrument & Equipment Corp.

Source: (01/09/2012)


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