Shenhua Draws Record Orders for Shanghai Share Sale, People Say

Sept. 26 (Bloomberg) -- China Shenhua Energy Co., the nation's largest coal producer, attracted a record of more than 2.6 trillion yuan ($350 billion) in orders for its Shanghai share sale, said two people with direct knowledge of the transaction.

Shenhua drew 1.9 trillion yuan from institutional investors and more than 700 billion yuan from individuals seeking the stock, the people said, citing preliminary tallies and asking not to be identified before an official announcement. Beijing-based Shenhua will sell as many as 1.8 billion shares at between 34.99 yuan and 36.99 each, it said Sept. 23.

The coal supplier received more orders than the 2.26 trillion yuan drawn by China Construction Bank Corp., which rose 32 percent on its Shanghai debut yesterday. Chinese investors, undeterred by the world's highest valuations for traded companies, are rushing to buy into a stock market that has almost tripled in size this year as returns on bank savings lag behind inflation.

``Shenhua has a very good market image and there is no risk to invest in the company as it can sustain stable growth,'' said Yan Shi, a Shanghai-based analyst at Core Pacific-Yamaichi International Ltd. ``It's a good choice for long-term investment.''

China Galaxy Securities Co. and China International Capital Corp. are arranging the sale.

Huang Qing, spokesman for Shenhua in Beijing, Song Nuan, a Beijing-based spokeswoman for Galaxy, and Tracy Hu, spokeswoman for CICC in Beijing, declined to comment.

China Oilfield

Demand from institutional investors for Shenhua's stock broke the 1.7 trillion yuan record set by this month's 6.7 billion-yuan Shanghai share sale for China Oilfield Services Ltd., the people said. Retail orders exceeded the 614 billion yuan for Construction Bank stock, they said.

Shenhua, listed in Hong Kong since October 2005, may raise as much as 66.6 billion yuan in the world's biggest share sale this year. The last six companies to hold mainland initial public offerings have jumped an average 250 percent on their first day of trade.

Shenhua shares have more than doubled in Hong Kong since Jan. 1, outpacing the 32 percent gain in the benchmark Hang Seng index and making it the third-best performer this year among the 40 members of the MSCI AC Asia Pacific Energy Index.

The transaction may top that of VTB Group, Russia's second- biggest bank, which raised $8 billion in May in the world's largest share sale this year