ASX BookBuild to launch its first IPO

The ASX BookBuild system is about to be tested with its first initial public offering.

Chinese-owned Queensland coal explorer U&D Coal Ltd plans to raise between $50 million and $125 million in an IPO scheduled to open on Monday, December 16, U&D company secretary Peter Edwards told DataRoom.

U&D plans to sell through AFS Capital Securities between 100 million and 250 million shares at 50 cents a share, says Edwards. The IPO’s book build will last four to five days.

“It’s a fairly exciting opportunity to use the ASX BookBuild for an IPO that hasn’t yet happened on the ASX,” says Edwards.

The ASX BookBuild is a software system that promises investors transparent pricing on IPOs, secondary share sales and block trades. Companies typically pay $25,000 to undertake an ASX BookBuild process. Investment banks charge much more, often a percentage of funds raised.

U&D is 51 per cent owned by a company called Australian Kun Qian whose ultimate controlling shareholder is China’s Henan Energy Chemical Group Ltd, says Edwards. U&D's other shareholders are British Virgin Island companies Golden Globe and China Kunlun, he says.

“The ASX BookBuild will give us more Australian investors,” says Edwards.

U&D will hope its deal goes better than the share sale by Liquefied Natural Gas Ltd which used ASX BookBuild to sell $10.85 million of shares, according to an ASX announcement.

Perth-based LNG sold 35 million shares at 31 cents each. But the deal was delayed and LNG was forced to cut the number and price of shares it was offering investors.

Foster Stockbroking declined comment on the LNG share sale.