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Aircraft lessor CDB Leasing declines in Hong Kong trading debut

[HONG KONG] China Development Bank Financial Leasing Co fell in its trading debut in Hong Kong after the aircraft lessor raised US$799 million in an initial public offering priced near the low end of a marketed range.

Shares of the Shenzhen-based company dropped 5 per cent to HK$1.90 as of 10:50 am, while Hong Kong's Hang Seng Index advanced 2 per cent. The plane lessor sold 3.1 billion shares priced at HK$2 each in its IPO.

The listing by China Development Bank Financial Leasing, an arm of China's biggest policy lender, comes two months after Bank of China Ltd's BOC Aviation Ltd held Asia's second-biggest initial share sale this year.

Burgeoning travel demand in Asia, poised to overtake the US as the world's biggest aircraft market, has spurred investment in plane-leasing, which can provide lucrative returns locked in multiyear contracts.

CDB Leasing broke a record of having the largest proportion of shares allocated to cornerstone investors for any Hong Kong listing of at least US$500 million, according to data compiled by Bloomberg.

It also set a record for the highest proportion allocated to a single cornerstone buyer in any major listing in the city, with state-owned power generator China Three Gorges Corp agreeing to purchase 42.1 per cent of the IPO shares, the data show.

The uptake by cornerstone investors reflects their confidence in the plane-leasing company, Hu Huaibang, chairman of China Development Bank, and Fan Xun, executive director of CDB Leasing, said in separate comments after a ceremony at the Hong Kong Exchange Monday.

BOC Aviation ended its first day on trading on June 1 HK$42, unchanged from the price set in its IPO which raised US$1.1 billion.

CDB Leasing's offering will add to the US$6.6 billion raised from first-time share sales in Hong Kong this year, down from US$17.4 billion in the same period in 2015, the data show.

Aircraft leasing made up 45 per cent of CDB Leasing's total revenue last year, according to the company's prospectus. The company owned and managed 191 aircraft as of December, with another 224 in the pipeline from orders and commitments.