Chipmaker SMIC's stock offering set to be China's largest in a decade; GIC among investors

SMIC could sell as much as 53.2 billion yuan (S$10.5 billion) of shares. PHOTO: AFP

BEIJING (BLOOMBERG, REUTERS) - Semiconductor Manufacturing International Corp (SMIC) is set to hold the mainland's largest stock sale in a decade, as China's top homegrown chipmaker raises capital while the US tightens restrictions on technology sales to the nation.

SMIC could sell as much as 53.2 billion yuan (S$10.5 billion) of shares, as it released offering details in a statement to the Shanghai Stock Exchange on Sunday (July 5). In May, analysts estimated a Shanghai listing could fetch somewhere in the US$3 billion range.

The offering would be the largest since Agricultural Bank of China's 68.5 billion yuan initial public offering in 2010. SMIC's Hong Kong stock jumped as much as 10 per cent on Monday to a fresh record high.

The initial institutional offer for the shares was 165 times oversubscribed. Two big sovereign wealth funds, Singapore's GIC and Abu Dhabi Investment Authority, subscribed as strategic investors for shares worth 3.32 billion yuan (S$655.3 million) and 400 million yuan, respectively.

China's National Integrated Circuit Industry Investment Fund, popularly known as "the big fund", is investing 3.5 billion yuan in the company, SMIC said.

SMIC's online subscription, mainly targeting individual investors, will start on Tuesday, it said.

The company is China's biggest contract manufacturer of chipsets and a major piece of Beijing's vision to create a self-reliant and world-class semiconductor industry. SMIC plans to use the stock-sale proceeds to develop next-generation chipmaking to try to compete with Intel Corp and Taiwan Semiconductor Manufacturing Co. Like TSMC, SMIC is a so-called foundry that helps fabricate silicon based on other companies' designs.

SMIC's shares have tripled in Hong Kong this year, compared with a 9 per cent drop for the Hang Seng Index, on bets trade friction with the US will force Beijing to focus more on home-grown tech and products to replace imports. China's state-backed funds pumped US$2.25 billion into a SMIC wafer plant in May.

The effort comes at a time the Trump administration is threatening to deny domestic companies like SMIC or Huawei Technologies access to crucial components and circuitry. Its listing is a boost for the STAR market, which has struggled to attract major technology companies since its launch last year.

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