China Travel International Investment Hong Kong will issue 20 per cent of the company to raise $774 million to fund planned acquisitions and for working capital. The 379.3 million new shares at $2.088 each will be subscribed by the state-run travel operator's majority shareholder, China Travel Service (Holdings) Hong Kong (CTS Holdings). They represent 16.7 per cent of the company's enlarged share capital. As part of the deal, CTS Holdings will sell about 284.5 million shares at HK$2.088 a share, raising $594 million for China Travel International Investment Hong Kong. This represents 15 per cent of the issued share capital. The placement share pricing represents a four per cent discount to the closing price of $2.175 per share as quoted on the Hong Kong stock exchange yesterday. Peregrine Capital, the manager of the placing has appointed Peregrine Brokerage and CEF Capital as placing agents. The shares would be placed privately to independent professional investors, China Travel International said. A Peregrine Brokerage sales staff member said more than half the shares were placed with Hong Kong investors, with the remainder in the overseas markets. He said the Hong Kong portion had been well received, with subscription of seven times the shares on offer. Following the transactions, China Travel Service's holding in the Hong Kong-listed counter will fall from 74.77 per cent to 66.47 per cent. The company said it was appropriate to strengthen the financial base by the subscription to enable it to capitalise on suitable investment opportunities when they arose. It said the subscription would broaden its capital base and the placing will broaden its shareholder base. Net proceeds from the subscription and will be used for proposed acquisitions with the remainder for general working capital purposes. The company said earlier this year it planned to expand its air and sea transport business. Last year, it established a forwarding alliance with China's Shenzhen Airlines and joined a group that will build and operate the freight forwarding centre at the new Hong Kong Airport at Chek Lap Kok.