China Agri-Industries Holdings, the mainland's largest processor of crops, will sell up to 20 per cent of its planned HK$2.6 billion Hong Kong initial public offering to Mitsubishi Corp next month, sources said.
Mitsubishi, the largest general trading conglomerate in Japan, had agreed to pay up to 7.9 billion yen (HK$510 million) to buy China Agri's shares at between HK$3.10 and HK$3.72 each, sources said.
The Japanese firm also promised not to sell shares within 12 months after completion of the offering, they said.
China Agri began taking orders from international investors yesterday for 697 million new shares. It is scheduled to meet local investors today, and trading of the stock is expected to begin on March 21.
As usual, the deal sets aside 90 per cent of the shares for institutional investors and the remainder for retail investors. BOC International and Goldman Sachs are arranging the deal.
China Agri, the spin-off unit of Hong Kong-listed Cofco International, saw a doubling of net income in the first nine months last year on the previous full year's earnings.
The firm reported HK$602 million in net profit up to September last year, against HK$254.9 million in all of 2005, and HK$130.7 million in 2004.
China Agri planned to spend most of the offering proceeds on its two main operations - oilseed processing and bio-fuel and biochemical businesses - which accounted for 65 per cent of the firm's net profit last year, sources said.
The company had said earlier that it planned to spend as much as HK$6.1 billion to expand capacity in the coming two years.
China Agri is also involved in rice-trading and processing, brewing materials and wheat processing.