UBS wins its first share sale in China

UBS AG will arrange its first share sale in China, joining Goldman Sachs Group Inc as the only global securities firms earning underwriting fees in the world's fastest-growing stock market.

Western Mining Co, based in Qinghai, will seek approval on June 5 from China's securities regulator for its Shanghai initial public offering, according to share sale documents.

UBS's Chinese venture will manage the sale, raising funds to help finance a 4.4 billion yuan (US$575 million) expansion and to repay bank loans.

Western Mining's sale would give Zurich-based UBS its first return since announcing the venture in September 2005. Chinese companies have raised almost US$41 billion in Shanghai and Shenzhen since the start of 2006, more than in the previous seven years combined, according to data compiled by Bloomberg News.

"For UBS, it's very important to start getting revenue and becoming a player" in China, said Fraser Howie, co-author of the book "Privatizing China: The Stock Markets and Their Role in Corporate Reform." "Eventually, it should become a significant portion of their business."

Global player

Companies may raise US$26 billion through IPOs in Shanghai in 2007, overtaking Hong Kong, Pricewaterhouse-Coopers LLP said in January. Three of the 10 largest share sales globally this year were Shanghai offerings - a fourth was a simultaneous Hong Kong and Shanghai sale.

China's market capitalization has swelled by about US$1 trillion this year, an increase almost equal to the total value of Italian stocks, according to data compiled by Bloomberg.

Goldman's Chinese joint venture helped arrange the 38.9 billion yuan Shanghai share sale by Ping An Insurance (Group) Co, the nation's second-largest insurer, in February. The deal made New York-based Goldman the fifth-largest underwriter in China this year.

The sale was the first underwritten by a local unit controlled by a Wall Street firm and the third-largest offering globally this year, after the US$8 billion sale by Russia's VTB Bank OJSC and the US$5.9 billion simultaneous Hong Kong and Shanghai IPO of China Citic Bank Corp.

Goldman also acted as a financial adviser on the US$3.3 billion Shanghai offering of Bank of Communications Co, for which it earned an underwriting fee but no league table credit.