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Billionaire behind 2009's biggest IPO

May 05, 2009 13:51 IST

The much-anticipated public offering of China Zhongwang Holdings, one of Asia's largest extruded-aluminum product makers, is expected to take place on May 8. It will be the world's largest of 2009 and could transform its chairman into China's richest person.

Liu Zhongtian, who founded the company in 1993 at age 29, holds 4 billion shares, or a 74 per cent stake in the business, according to the prospectus. The company finalized its initial offering price at seven Hong Kong dollars (90 cents) a share, near the low end of its range. It should still be plenty for Liu to grab the top spot, giving him a net worth of $3.6 billion.

In March, when we published our billionaire rankings, East Hope Group's Liu Yongxing was China's wealthiest citizen, worth $3 billion at the time. His fortune too comes from aluminum as well as feed and investments. Today, real estate heiress Yang Huiyan, age 27, has climbed back to the top, worth a recent $3.3 billion, but still shy of Liu Zhongtian's anticipated net worth.

The now 45-year-old chairman has built China Zhongwang of the country's northeastern Liaoning province into a leading maker of aluminum products used by the transportation industry. The company is a supplier to the new Terminal Three at the Beijing Capital International Airport. Its products are also expected to be used in the construction of the 2010 Word Expo in Shanghai.

The entrepreneur has won numerous accolades from China's government including National Model Worker by the State Council in 2000 and "Constructor of Socialism with Chinese Characteristics" by the Central Committee of the Communist Party and others in 2004.

Net profit last year more than doubled to 1.9 billion China yuan, or $279 million. The prospectus says net profit will not be less than $198 million for the first six months of this year.

There are risks associated with one person controlling so much of a public company. As stated in the offering documents, "Mr. Liu has, and will continue to have, substantial influence over our business. We cannot assure you that Mr. Liu will not cause us to enter into transactions or take, or fail to take, other actions or make decisions that conflict with the interests of our other shareholders." Liu Zhongtian also controls several other businesses which do business with China Zhongwang, according to the prospectus.

Will Liu be the first of several new Chinese billionaires to debut this year? A rebound in the country's stocks so far in 2009 is expected to spur more initial offerings, and could very well create more fortunes along the way.

Russell Flannery, Forbes
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