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Sunshine Oilsands down 4.3% on its IPO price in early trading

  • Alvina Yuen
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Canadian oil explorer Sunshine Oilsands ended its first morning of trading in Hong Kong down 4.3% on its IPO price. The sluggish performance was expected, largely due to delays in the offering process and negative income streams.

The company, backed by Hong Kong private equity firm Cross-Strait Common Development Fund as well as several Chinese state-owned enterprises (SOEs), raised about $580 million through its IPO, having originally targeted $700 million. Shares were priced at HK$4.86, the bottom of an indicative range, and fell to HK4.65 during morning trading on Thursday.

Sunshine Oilsands' cornerstone investors - China Investment Corp (CIC), China Petrochemical Corp. (Sinopec) and US asset manager EIG Global Energy Partners - together pledged $350 million to the offering.

The IPO marketing process was troubled by concerns over the company's lack of profits. According to BOC International, Sunshine Oilsands is unlikely to see positive income streams before 2014 as all of its projects are in the exploration stage. It is estimated the company posted a net loss of $77 million last year.

In February, Sunshine Oilsands postponed its listing activities to allow more time to target Canadian investors.

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