Financial Times – 26/11/2010
Vale, the world’s biggest iron ore miner, has received approval to list on the Hong Kong stock exchange and will next month become the first Brazilian company to be traded in the city.
Brazil’s largest company, which is already listed in São Paulo, Paris, and New York, will introduce its shares to Hong Kong in the form of depositary receipts. No new shares will be issued as part of the deal.With a market capitalisation of $164bn, Vale is set to become one of the 10 biggest companies on the Hong Kong bourse, alongside heavyweights such as HSBC, PetroChina and ICBC.
Hong Kong Exchanges & Clearing, operator of the stock exchange, is trying to attract more business from foreign multinationals in a bid to reduce its reliance on Chinese companies.
Already this year the bourse has attracted its first listings from companies based in Russia, France and Mongolia.
Groups from South Africa and Kazakhstan are said to be planning share sales in the city.
“If Vale’s move is successful, it will set a precedent for other companies to follow,” said a person close to the deal.
Petrobras, the Brazilian national oil company, is considering issuing depositary receipts in Hong Kong, the Ming Pao newspaper reported this month.
Vale’s listing, which is being arranged by JPMorgan, will allow the company to gain direct exposure to Asian capital markets and enable its shares to be traded across multiple timezones.
Analysts reckon that Vale is one of a small number of companies that has both the size and reputation needed to attract a sufficient amount of trading volume across four different exchanges.
Last month the company reported record profits, revenues and margins for the third quarter of 2010.
Cash generation, measured by adjusted earnings before interest, taxes, debt and amortisation, rose to $8.8bn, well above its previous record of $6.4bn in the third quarter of 2008 and the $5.6bn reported in the second quarter of this year.
Shipments to China had risen to 46 per cent of its total, compared with 39 per cent in the second quarter.