China's second-largest telecom equipment maker ZTE Corp. (0763.HK) Friday priced its initial public offering at HK$22 a share, the top end of an indicative range, to raise the equivalent of US$398 million, according to sponsor Goldman Sachs.

ZTE sold 141 million shares, or 15 percent of its enlarged share capital. It set an indicative price range of HK$17.5 to HK$22 a share.

ZTE has an over-allotment option to issue around 19 million additional shares, or 13.5 percent of the shares on offer.

Sources familiar with the deal said the retail tranche of ZTE's IPO was 250 times covered.

The company had planned to sell 10 percent of its IPO shares to Hong Kong retail investors and the remainder to institutional investors.

But strong demand for the retail tranche triggered a clawback mechanism that will see 50 percent allocated to retail investors. After the clawback, the institutional book was 30 times subscribed, said a source close to the deal.

ZTE is the first Chinese-listed company to seek an overseas listing in Hong Kong. The counter will start trading on Dec. 9, regulators say.

Goldman Sachs is the sole global coordinator and sole bookrunner for the deal.

Analysts said strong liquidity in the cash market and a discount in valuation to its global peers could help push ZTE's price higher on its debut.

"Strong liquidity and positive sentiment in the market have lent a lift to recent IPOs," said KGI Securities Director Ben Kwong, and it is likely ZTE will rise when it lists Dec. 9 despite the top-end pricing.

(Shenzhen Daily December 6, 2004)