Beijing Yanjing Brewery has become the latest mainland company to raise funds on the country's capital market, taking advantage of low yuan interest rates and the prevailing stock-market volatility. The country's second-largest brewer said it would issue 700 million yuan (about HK$656.04 million) of bonds convertible into shares to raise funds for business development and acquisitions. The five-year convertible bonds would carry an annual coupon of 1.2 per cent. The rate is much lower than the benchmark five-year banking lending rate of 5.58 per cent. The brewer's existing shareholders have priority when subscriptions open tomorrow. The bonds, to be listed in Shenzhen, can be converted into shares from October 16 next year at a conversion price of 10.59 yuan a share. Yesterday, shares in Beijing Yanjing fell 40 fen to close at 8.70 yuan. So far this year, it has lost 17.61 per cent. Yanjing Brewery is 55.45 per cent owned by red chip Beijing Enterprises Holdings, which would guarantee the bonds. The brewer has an 8 per cent share of the nation's beer market and has a 90 per cent slice of the pie in Beijing. This year's production target is 1.9 million tonnes of beer, rising to three million tonnes within three to five years. Last year, it produced 1.7 million tonnes. After-tax profit fell 20 per cent in the first half this year to HK$83.63 million due to higher advertising and marketing expenses. Citic Securities, a unit of the mainland's largest trust company, China International Trust and Investment Corp, is underwriting the bond issue. Beijing Yanjing said the money raised would be used to upgrade production facilities, establish a research centre and strengthen its distribution network. About 300 million yuan would be used for acquisitions, including acquiring controlling stakes in a Shandong plant and another in Inner Mongolia. It would also invest in 70 per cent of a Shanghai wine company. The issue confirms the growing interest by mainland companies in the capital market. Last month, Shenzhen-listed Sichuan New Hope Agribusiness, a feed-meal maker, issued 800 million yuan of convertible bonds to raise capital for business development. At the same time, China Yangtze River Three Gorges Project Development revealed a plan to issue five billion yuan in bonds to finance the dam project. In June, Shenzhen-based developer China Vanke issued 1.5 billion yuan in convertible bonds to fund operations.