The flotation of red-chip candidate Gitic Enterprises was last night thrown into serious doubt as it emerged China's securities regulators had intervened at the last minute, stating the firm had failed to obtain necessary government approval, investment banking sources said. The twist comes just two days before the close of Gitic's $105 million share offer which was reported to have been more than 600 times subscribed. The China Securities Regulatory Commission (CSRC) sent a letter to Hong Kong regulators saying Gitic did not obtain necessary mainland approval for the flotation, scheduled for March 26, sources said yesterday. The mainland and local securities watchdogs signed an agreement in 1993, stipulating that the direct or backdoor listing of a mainland firm in Hong Kong must have prior approval from the mainland regulators. Last night there was still confusion as to whether the listing would be delayed or scrapped. Officials from Gitic and its sponsors, Goldwyn Capital and ABN Amro Rothschild, were not available for comment. Gitic's public relations agency, IFN Communications, could not say if the float was going ahead, but it said notices on the public offer would continue to appear in newspapers today. Investment banking sources said the withdrawal of the listing at the last minute would have a serious impact on other red-chip counters and might put a dampener on the recent wave of profitable listings of mainland companies. The CSRC move could mean the central government is getting tougher on enforcing its rules on the overseas listing of mainland companies. Investors have been bidding up the share prices of red chips ahead of Hong Kong's July 1 return to Chinese rule. Gitic Enterprises, which makes marble and granite construction materials, is owned by Guangdong International Trust & Investment Corp, an investment arm of Guangdong province. Investors were betting the parent company, which also owns banks, finance companies, toll roads, and hotels, would inject some of those assets into the listing vehicle. Gitic's huge oversubscription comes on the heels of the successful listing of Shum Yip Investment, a government-owned property developer in Shenzhen. Its share price tripled in its first two days of trading earlier this month. If the float goes ahead, Gitic will have harvested more than $50 million in interest income from the subscription money, compared with its estimated profit of $42.7 million for last year. Some market players originally expected the issue would be 800 times subscribed given its small size and the euphoria for red chips. The grey market price has been pushed up to between $2.50 to $3 a share, against the issue price of $1.05. Gitic has failed in two previous attempts to float in Hong Kong.