China South Locomotive & Rolling Stock Corp, the nation's largest maker of rail vehicles, may raise US$1.5 billion from dual Shanghai and Hong Kong initial public offerings, insiders said yesterday.
The Beijing-based company will sell 1.6 billion shares, or a 14-percent stake, in Hong Kong to raise up to HK$4.4 billion (US$564 million), they said. It's also offering as many as 3 billion new shares, or a 26-percent stake, in Shanghai for as much as 6.54 billion yuan (US$954 million) according to a statement to the Shanghai Stock Exchange yesterday, Bloomberg News reported.
The sale will test demand for China's mainland stock offerings in a year when slumping equity markets forced at least eight IPOs to be delayed or scrapped in the Hong Kong market. China's mainland stock market has fallen 47 percent this year, the second-worst performer among 88 major global indexes tracked by Bloomberg News, prompting the securities regulator to slow share sale approval.
"China South Locomotive's IPO is very interesting based solely on timing. Investors today are afraid of any risk and are likely overly discounting this," said Jeff Papp, a senior analyst at Illinois-based Oberweis Asset Management Inc which manages US$1.5 billion. "The one area that still looks highly favorable is infrastructure-related plays."
The dual offering could be the largest first-time public share sale by a Chinese company since the US$5.7 billion sale by China Railway Construction Corp between February and March, according to Bloomberg News.
China's State Council has earmarked 2 trillion yuan to expand and upgrade its railway system between 2006 and 2020, according to a Macquarie report last month.
(Shanghai Daily August 5, 2008)
