Machinery giant's IPO on track after ruling

First Tractor, the mainland's largest agricultural machinery maker, is pushing ahead with its 1.15 billion yuan (HK$1.35 billion) initial public offering today after the securities regulator dismissed fears that it would weaken the market.

The company received a go-ahead from the China Securities Regulatory Commission (CSRC) to float 150 million shares, six months after it cleared an IPO hearing.

It will set an offering price on July 25 following the book-building process, according to a prospectus it filed to the Shanghai Stock Exchange yesterday.

First Tractor plans to raise 1.15 billion yuan for new projects and to upgrade its technologies. That would price the Shanghai-listed shares at 7.67 yuan, a 55 per cent premium to its Hong Kong shares.

H shares of First Motor, which completed an IPO in Hong Kong in 1997, edged up 0.67 per cent to HK$6.03 yesterday.

The CSRC cleared First Tractor's IPO in January. But it fuelled investors' fears of a liquidity drain, leading to an appeal to the commission to suspend the offering.

On Friday, the CSRC said it would continue to approve IPOs, damping investor expectations it would curb new offerings to shore up confidence.

'Based on past experience, suspending IPOs won't help the market,' the commission said. 'Therefore, the regulator should deepen the reform of the share offering mechanism.'

Beijing has said it would halt or slow IPO approvals if the market turned bearish and speed up approvals in a buoyant market.

The regulator said the recent market downturn was the result of an overall economic slowdown that had dented investors' interest. But a recent survey by internet portal Sina found more than half of mainland investors blamed a flood of IPOs for the poor market performance.