Zijin Gold International Co., a unit of China’s top mining company, is seeking to raise HK$25 billion ($3.2 billion) through an initial public offering in Hong Kong, Bloomberg reports. The IPO is expected to be the largest of its kind globally since May. The company is offering approximately 349 million shares at HK$71.59 each, with trading set to begin on September 29.
The gold producer is coming to market as gold prices continue to climb, recently breaking another record. Rising prices provide a favorable environment for miners to raise capital, either to fund expansion or reduce debt. Xiaofeng Li, a Beijing-based lawyer with experience advising Chinese natural resource firms on overseas deals, said, “Investors should be very proactive in investing in Zijin. Zijin Gold has a lot of potential to grow.”
Zijin Gold’s parent company, Zijin Mining Group Co., is among the world’s largest gold producers, with mining operations spanning Central Asia, Africa, and Latin America. Bloomberg Intelligence notes that Zijin Gold has a track record of identifying high-potential mines and acquiring them at low cost. The company’s IPO prospectus states that its output is growing faster than any other sizable competitor.
Gold prices have more than doubled over the past three years, recently surpassing the inflation-adjusted record set in 1980. Prices topped $3,700 this week, driven by central bank purchases and concerns over the Federal Reserve’s independence, creating further investor interest in gold and gold mining companies.
The global rally in gold has encouraged several producers to raise funds offshore. Among them is PT Merdeka Gold Resources, which plans to raise over $280 million in what would be Indonesia’s largest IPO of the year. Zijin Gold’s listing is poised to be the largest globally since the IPO of Chinese battery giant Contemporary Amperex Technology Co. Ltd., which raised more than $5 billion.
A group of over two dozen cornerstone investors, including Singapore sovereign-wealth fund GIC Pte, Hillhouse Investment, BlackRock Inc., Fidelity International Ltd., and Millennium Management LLC, have agreed to purchase about half of the IPO allocation in exchange for holding the shares for at least six months, Bloomberg previously reported.
