China's Cinda to price at top of range Cinda looks set to raise almost $3bn when it becomes the first China "bad" bank to list shares in Hong Kong next month, amid strong investor interest despite revealing its heavy exposure to the beleaguered coal sector. Almost two-thirds of Cinda's equity holdings are in the coal industry, according to its prospectus, released on Monday. About 60 per cent of its distressed debt portfolio is also linked to real estate, a sector which some see as burdened by overcapacity. Most of Cinda's share portfolio was acquired through debt-for-equity swaps with distressed companies. Some analysts are predicting that coal and property will be among the sectors worst hit in the next phase of Chinese market-led reforms, as laid out after the recent Communist party plenum. Coal is expected to suffer as the government makes a determined effort to cut pollution and switch to cleaner energy, say analysts at Bernstein Research, while developers will suffer from land reforms and potential property taxes. Cinda also has its own real estate development business. However, those concerns have not deterred investors, who have already placed about $10bn of early orders, according to one banker involved. It is pretty dramatic. I haven't seen this [level of demand] for a long, long time," he said, adding that the weight of orders should enable Cinda to price near the top of its range, taking the deal size to about $2.8bn if it exercises the option to sell extra shares. Earlier estimates were for a $2.5bn total deal size. Cinda, the first of China's bad banks from the late 1990s to seek outside investors, has presold about half the deal to cornerstone investors, who are guaranteed a certain amount of stock in exchange for holding it for six months. One of the reasons investors are said to be keen is that they believe Cinda has undervalued its assets compared with the gains realised from its equity holdings since 2010, the period covered in its prospectus. Cinda has made gains of Rmb13bn ($2bn) at an average exit multiple of 2.3 times what it paid for equity stakes in debt-for-equity swaps over that period, according to the prospectus. Its remaining equity stakes are carried at a historic book value of Rmb27.6bn, but have been valued by an independent third party called American Appraisal China at Rmb62.3bn, although the prospectus warns that this is "not fair value in accordance with IFRS," the International Financial Reporting Standards. Cornerstone investors are taking just over $1bn of the deal. China Life is taking $200m as is Och-Ziff, the hedge fund, while Norges Bank is taking $150m and Farallon Capital Management, another hedge fund, $100m. Six other investors, including four Chinese state-owned groups, Ping An's Asset Management arm and Oaktree, another hedge fund, are taking a total of $433m.