Chinese chipmaker Semiconductor Manufacturing International Corp (SMIC) is pricing its shares for its Shanghai listing at more than double its initial target. At its proposed share prices, the company could stand to raise up to 46.29 billion yuan or roughly $6.55 billion in its latest share sale.
According to its filing with the Shanghai Stock Exchange submitted on Sunday, SMIC is planning to price its shares in Shanghai at 27.46 yuan per share. The decision to increase the price was made after the continued surge of its Hong Kong-listed stocks last week. SMIC originally planned to raise around 20 billion yuan in its share sale in Shanghai.
The deal's underwriter, Haitong Securities, can opt to use the share sale's overallotment option, which will expand the offered size by an additional 15 percent. Depending on the demand, the company could stand to raise as much as 53.23 billion yuan. According to SMIC, the institutional portion of its share sale has been oversubscribed nearly 165 times, which means that there is a good chance of utilizing its overallotment option during the public portion of the transaction.
Among its foreign institutional investors, the largest subscriptions have been from two major sovereign wealth funds, namely from the Abu Dhabi Investment Authority and Singapore's GIC. Abu Dhabi Investment subscribed to shares worth 400 million yuan, while GIC subscribed to shares worth 3 billion yuan. Meanwhile, China's National Integrated Circuit Industry Investment Fund has subscribed to 3.5 billion yuan worth of the company's stocks on offer. The company's online subscription for individual investors in Shanghai is expected to start on Tuesday this week.
SMIC's listing in Shanghai is aimed at bolstering its capital amid a series of previously announced expansion plans to reduce the country's dependence on foreign-made computing components. The company recently received financial support from state-owned funds to help it develop new technologies and enhance its production capacity.
Share prices of the country's top chipmaker surged by more than 5 percent on Friday last week, closing at HK$33.25 per share. Since the end of March, its shares have rallied by more than 172.5 percent following the implementation of supporting government measures and the injection of billions of dollars in new capital.
As tensions between China and the US continue to escalate, the Chinese government has been rolling out new measures to support local manufacturers and startups. The country is betting particularly big on SMIC, with the hopes of having its products become as advanced as those offered by its US-based counterparts.
