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chinadotcom's GEM Listing Adds Fuel to Hong Kong Net Fire

chinadotcom corp. Monday said it will list its hongkong.com corp. property on the Hong Kong Growth Enterprise Market board, marking the first local listing by the Asia-targeted Net play.

chinadotcom (CHINA) will offer 640 million shares representing 16 percent of hongkong.com, and will retain 84 percent ownership. In a statement, chinadotcom said that the proposed listing represents its "support and confidence in the local financial market and the potential of the Internet and e-commerce market in Hong Kong."

The funds from the IPO, which the portal network has forecast to reach a total of HK$1,062 million (US$136.5 million), will go towards expanding the network's infrastructure, buying e-commerce software applications, and marketing campaigns in Asia, North America and Europe. The fresh financing will also support chinadotcom's recent favorite pastimes of partnerships with and acquisitions of relevant Asia Net companies, as well as the repayment of loans.

The stock will be priced between HK$1.60 and HK$1.88. 544 million shares will be available to institutional investors, with a fractional 5 percent to be released to selected registered subscribers. Four billion shares will be outstanding after the listing.

"hongkong.com already has a very strong brand presence in the local market, and the GEM listing will further expand this brand both locally and globally," said Peter Yip, chinadotcom's chief executive officer.

Yip added that the GEM listing will perform in the 'distribute' end of its 'build, distribute, sell' business strategy mantra. He also said that the IPO will help hongkong.com attract and retain staff in a competitive job market.

Lehman Brothers and BNP Prime Peregrine are jointly acting as global coordinators, sponsors and bookrunners for the listing.

The potential listing has been the object of speculation in Hong Kong for more than four months ago, when it was first reported that chinadotcom was weighing a back-door versus a direct GEM board listing. chinadotcom had hoped for a valuation as high as $1 billion for its premiere Asia IPO.

Another inspiration for the listing decision may be chinadotcom's observation of the furious investor craze sparked by tom.com's upcoming IPO. This upcoming GEM board IPO was oversubscribed 669 times the allotted amount, and though this figure represents half the 1500 times allotment projection, it brought investors and Hong Kong police to the streets last week when applications for the shares first became available.

Advanced payments amounting to HK$5.09 billion (US$39.44 billion) have already been collected by tom.com, which was founded and rolled out services just last month. If the hongkong.com listing nears the pace of investor interest of this latest GEM listing, it could only continue to spur Hong Kong's Net stock fever.