By Rebecca Keenan and Jesse Riseborough
Sept. 11 (Bloomberg) -- Clive Palmer, Australia’s fifth- richest man, expects to complete an initial public offering of his Resourcehouse mining group in Hong Kong by the end of the year to benefit from demand for resources in China.
“There is a big need in China for growth for resources,” Palmer said today in a phone interview from Perth. He said he’s still deciding what mining assets the IPO will include, and wouldn’t give a value.
Palmer, planning a A$7.5 billion ($6.5 billion) coal project and an iron ore mine, is seeking to take advantage of surging interest in IPOs in Hong Kong, on target for its busiest month for such shares sales since 2007. He may sell between $2 billion and $3 billion in shares, the South China Morning Post reported today, citing people it didn’t identify.
“It’s still a very, very big lick, it would need a lot of interest from China and Hong Kong to get behind it,” said Peter Arden, a Melbourne-based analyst at Ord Minnett Ltd., an affiliate of JPMorgan Chase & Co. “The window for IPOs is opening.”
Australasian Resources Ltd., 66 percent owned by Palmer, advanced 4.4 percent to 47 cents at the 4:10 p.m. Sydney time close on the Australian stock exchange. The stock has risen 27 percent this year.
Soccer Club
Palmer, chairman of the closely held coal and iron ore company Mineralogy Pty., was the only person in the top-10 of Business Review Weekly Magazine’s annual rich 200 list whose wealth increased last year. Palmer’s fortune more than doubled to A$3.4 billion, according to the list that was published in May. He also owns the Gold Coast United soccer club.
China’s industrial production grew at a faster pace than forecast in August and new lending unexpectedly accelerated, indicating a strengthening recovery in the world’s third-biggest economy. Urban fixed-asset investment for the eight months to Aug. 31 climbed 33 percent, the statistics bureau said today.
“One thing that is clear is the Chinese are planning to move another 350 million people to the cities from rural areas and that is going to increase demand for commodities,” Palmer said.
Resourcehouse may include Queensland coal assets held by Palmer and joint venture partner state-owned China Metallurgical Group Corp., Palmer said. It’s unlikely to include the iron ore operations Palmer controls in Western Australia or the Yabulu nickel refinery he bought from BHP Billiton Ltd. in July.
Talks between Australasian and Chinese partner Shougang Corp. for financing of Palmer’s proposed A$2.7 billion iron ore project in Western Australia had not been successful, Perth- based Australasian said in July.
UBS, Macquarie
Funds from the proposed IPO, being managed by UBS AG and Macquarie Group Ltd., will be used to develop resources, he said.
Waratah Coal Inc., the joint venture that owns the coal projects in Queensland and is chaired by Palmer, signed an agreement in May with China Metallurgical to get funding for up to 70 percent of the project. Waratah will fund the remaining 30 percent, Palmer said then. Mineralogy bought Waratah last year for C$85.8 million ($80 million).
Palmer planned a A$5 billion IPO of his company Resource Development International Ltd., owner of iron ore, steel, nickel and energy assets, in July last year, aiming to be dual listed in Hong Kong and Australia. The proposal was shelved after an unsuccessful exploration campaign, he said today.
“The worry I see is that it’s possibly a bit early and my sense of what he’s trying to do, and it’s not a criticism of him, A$5 billion was a very big ask last time,” said Minnett’s Arden. “That’s where he ran into trouble.”
To contact the reporters on this story: Rebecca Keenan in Melbourne at rkeenan5@bloomberg.net; Jesse Riseborough in Melbourne at jriseborough@bloomberg.net.
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