Lafarge-Shui On in US$600m spin-off of cement unit, China

Lafarge-Shui On in US$600m spin-off of cement unit, China
Published: 13 November 2009

Lafarge and Shui On Construction and Materials Ltd are set to spin off their cement joint venture, aiming to raise US$500m-$600m from a Hong Kong initial public offering in 2010, sources close to the matter said.

The IPO will join a long line-up of listing candidates hoping to raise money from a revival in Asian stock markets.

"The company plans to start preparation work in January, and expects to list in second to third quarter of 2010," one of the sources said.

"Regarding our cement business, we are considering various financing options to ensure the future development of the business," said a Shui On Construction spokeswoman, declining to comment specifically on the company’s plans.

Lafarge Shui On Cement, in which Shui On Construction has a 45 per cent stake, was formed in 2005. The cement maker is focusing on projects in southwest China, including Chongqing, Guizhou, Sichuan and Yunnan.

The joint venture contributed a HK$168m profit to Shui On Construction in the first half of 2009, a 62 per cent increase on the same period last year, as a result of sales volume and price increases and lower production costs.

At the end of June 2009, Lafarge Shui On Cement had a total production capacity of 24Mta.