Sateri eyes $1bn Hong Kong listing

A leading global producer of the wood-based cellulose used to make textiles is planning a $1bn Hong Kong listing, in a development that underscores rising trade links between China and Brazil.

Privately held Sateri Int ernational, which owns pulp production mills in Brazil and China, is seeking expansion capital to meet soaring demand for its products, according to people familiar with the matter.

Sateri was founded in 2003 and its expected initial public offering is testimony to the rapid development of industrial companies that focus on emerging markets, in particular China.

Sateri declined to comment on a possible fundraising. “The Brazil-China nexus forms the foundation of our business,” Will Hoon, chief executive, told the Financial Times.

Deepening trade flows between Brazil and China offer big opportunities for suppliers of resources, such as iron ore, and producers of water-intensive commodities such as cellulose.

China last year displaced the US as Brazil’s top trade partner, with bilateral trade worth $36bn, more than treble that of 2005. Brazil had a trade surplus of $4.3bn with China last year, driven by exports of minerals and soya beans.

The financial community is alert to the trend. BTG Pactual, the Brazilian investment bank, last year opened an office in Hong Kong in anticipation of a rise in deals.

Sateri is majority-owned by RGE, the conglomerate controlled by Sukanto Tanoto, one of Indonesia’s richest men.

Sateri uses timber to produce dissolving wood pulp, a key raw material for the production of viscose staple fibre, which is used to make yarn and fabrics.

Chinese demand for VSF has more than doubled since 2008 and accounts for almost 60 per cent of annual global demand of 2.5m tonnes.

Cotton-related pulp can also be used to make VSF, although supply from this source is struggling to expand to meet demand.

According to Sateri, its Brazilian mill can produce 450,000 tonnes a year of dissolving wood pulp.