Chinese Auction House Poly Going Public

The Wall Street Journal is reporting that Chinese auction house Poly is going public with a $331 million initial public offering (IPO). Poly started its auction business in 2005 selling Chinese paintings, but has now expanded into a full service fine and decorative arts auction house plus coins and books.

The Wall Street Journal reports

HONG KONG—Chinese auction house and entertainment company Poly Culture Group is raising as much as US$331 million in an initial public offering in Hong Kong, according to a term sheet seen by The Wall Street Journal Thursday, making it the first major Chinese auction house to list in the city.

The state-owned auction house, which started taking orders from investors Thursday, is selling 77.8 million shares in an indicative price range of HK$28.20-HK$33.00 ($3.64-$4.26) each, the term sheet showed.

The price range represents 14.5 times-17 times forecasted earnings for 2014, a personal familiar with the situation said Thursday. Hong Kong's benchmark Hang Seng Index is trading at 9.95 times.

Poly Culture, which is controlled by state-owned enterprise Poly Group, was set up in 2000, according to its preliminary listing prospectus. It grew from a small museum at the conglomerate's Beijing headquarters to managing performing-arts theaters, cinema, movie and television production and an art gallery. It expanded into the auction business in 2005.

The auction division, Poly Auction, held its first sale in 2005, featuring only traditional Chinese paintings, but has since grown to sell Chinese antiques, contemporary art, stamps, coins and historical books among others.

Poly Auction is the largest art auction company in China and the third-largest auction house in the world, after Christie's and Sotheby's.

The company's profit in the first 10 months of last year totaled 308.2 million yuan (US$51 million), down 2.7% from a year earlier, according to the prospectus.

The company will price the deal on Feb. 28 and is scheduled to begin trading on the Hong Kong stock exchange March 6.

Poly Culture will use proceeds from the offering to develop its art business and make cinema investments.

CLSA Ltd. is the sole global coordinator for the share sale, the term sheet showed.

Source: The Wall Street Journal