Controversial publisher Jimmy Lai Chee-ying is understood to be in negotiations to purchase rival publisher South China Strategic Holdings and use it as a vehicle for the backdoor listing of his Next Media group. This is the second time in a week rumours have emerged that Mr Lai is seeking a way to list his media interests before the handover. Rumours emerged last week Mr Lai was interested in a backdoor listing and market speculators said Paramount Publishing was a possible acquisition target. Sources said a deal with Paramount now seemed unlikely, but agreed buying South China - which owns Chinese daily Express News and magazine Surprise Weekly - made sense. Earlier plans by Next to go public were scuppered after investment banks refused to sponsor the listing, fearing a backlash from the Chinese Government, which Mr Lai criticised in flagship weekly Next magazine. Next, which publishes books and magazines, was forced to put its listing application on hold after former sponsor Sun Hung Kai International (SHKI) pulled out mysteriously ahead of a final hearing with the listing committee in March. Sources said Next was planning to buy South China and inject the media operations into the company. Any asset injection following the possible acquisition would not include Mr Lai's flagship newspaper, the Apple Daily , which is not under the control of Next Media. Both South China and Next denied the rumours yesterday. Next chairman Yeung Wai-hong said: 'We have no plans to buy into any public companies or sell our shares to them. We are holding no discussions with any of them.' He admitted the company's listing application had made no progress following SHKI's withdrawal. He said Next had yet to appoint any sponsor even though talks with investment banks 'went on and off'. 'Without a listing, we won't vanish,' he said. South China shares rose 10 per cent yesterday to 26 cents on active trading of 67.52 million shares worth $17.87 million. An analyst at a European brokerage said that after rumours of the Paramount acquisition surfaced, Next was put in a difficult position fixing a purchase price. Market observers said they were not surprised to see Mr Lai seeking a backdoor listing as the chances of finding a sponsor for a flotation of Next were increasingly slim.