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ZTE Unveils Hong Kong IPO

Light Reading
News Analysis
Light Reading
11/23/2004

ZTE Corp. (Shenzhen: 000063) is set to list its shares on the Hong Kong stock exchange on December 9 and raise up to $453 million in the process.

ZTE launched its listing roadshow on Monday, and plans to sell 141.1 million shares at a price between 17.5 Hong Kong dollars (US$2.25) and HK$22 (US$2.83). If demand is high, it will sell another 19.1 million shares.

A price will be decided on December 2. An offer at the top of the range would raise HK$3.5 billion (US$453 million) if all 160.2 million shares were sold, while the bottom of the range price would raise HK$2.8 billion (US$360 million).

The move comes just weeks after ZTE said it had generated more revenues in the first nine months of 2004 than in the whole of 2003 (see ZTE Nears HK IPO).

In a statement, ZTE says it will use about 60 percent of the proceeds for international expansion, and the remainder for R&D. As a result, ZTE will more than double its annual product development expenditure in 2005 to 900 million yuan renminbi (US$109 million) and build a new R&D center in Shenzen.

The vendor has been building up to an international offer, to add to its current listing on China's Shenzhen exchange, for some months (see Asia Carriers Live in Interesting Times and ZTE HK IPO OK'd). It first considered the move in 2002, but abandoned that effort in early 2003 (see ZTE Plans IPO).

Its fellow major Chinese vendor, Huawei Technologies Co. Ltd., also has IPO aspirations but has yet to set a timetable (see Is Huawei Edging Closer to IPO?).

— Ray Le Maistre, International News Editor, Light Reading

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