Great Wall revs up for 3b yuan listing

PUBLISHED : Saturday, 03 September, 2011, 12:00am
UPDATED : Saturday, 03 September, 2011, 12:00am

Great Wall Motors, the mainland's largest homegrown manufacturer of sport utility vehicles, will kick off an initial public offering on the Shanghai Stock Exchange next week that is expected to raise 3.17 billion yuan (HK$3.87 billion).

The Hebei province-based vehicle maker will float 304.2 million A shares, or 10 per cent of its enlarged capital, allowing it to boost annual production capacity to 800,000 units.

The price consultations with institutional investors will begin on Wednesday.

Public investors can subscribe to the new shares on September 19. Based on projected proceeds of 3.17 billion yuan, Great Wall would offer the shares at 10.42 yuan each, representing a 12 per cent premium to the company's H shares that closed at HK$11.30 yesterday.

Great Wall began preparations for a Shanghai listing in 2004, after it raised HK$1.7 billion on the Hong Kong stock exchange. It received approval from the China Securities Regulatory Commission in early August to launch the A-share IPO.

Great Wall's A-share offering comes after the benchmark Shanghai Composite Index has lost 10 per cent this year.

The CSRC reviewed Great Wall's IPO only in the week from August 1 to 7 when it slowed down the listing approvals to boost the weak market. Normally, the regulator would hear about eight IPO applications a week.

Great Wall, whose Hover H SUV is the mainland's best-seller in its segment, is also looking to expand overseas production and plans to produce cars in Bulgaria by the end of this year.

The company's car and truck shipments jumped 47 per cent in the first half of the year, to 178,485 units, from a year earlier, according to JD Power and Associates.

Analysts said the regulator would use Great Wall's IPO to test the water before it gave the go-ahead to a large-sized offering by state-owned dam builder Sinohydro, which was seeking to raise 17.3 billion yuan in Shanghai, the largest share sale on the mainland this year.

'The declining turnover shows that the market had yet to find the bottom,' said Shenyin Wanguo Securities analyst Wei Daoke. 'Further monetary tightening would exacerbate the weak liquidity.'

The Shanghai index dropped 1.09 per cent to 2,528.28 yesterday, and analysts expected it to fall below the 2,500-point level soon.

Mainland IPOs in the first eight months of this year soaked up funds worth 200 billion yuan from the market. Investors blamed the influx of fresh equities for the market downturn.


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