Hong Kong listing will be the first from mainland firm acquired by foreign fund Goodbaby Group, the mainland's largest producer of baby carriages as well as other products for young children, plans to raise up to US$200 million from an initial public offering in Hong Kong later this year, sources said. The sale marks the first IPO from a mainland company acquired through a leveraged buyout involving a foreign fund. Private equity firm Pacific Alliance paid US$122.5 million for a 67 per cent stake in Goodbaby in January last year, arranging US$55 million in bank financing to execute the deal. The company planned to sell about US$100 million in new shares and up to US$100 million old shares, a source said. The sale could cut by about 50 per cent Pacific Alliance's stake in the company. Goodbaby would sell shares as a red chip, or a mainland-based company incorporated offshore, after scrapping a plan to sell shares in the mainland, where it had expected to command a 20 per cent premium to what it might earn in Hong Kong, a source said. A shares are getting generous valuations compared with H shares. Consumption play Tsingtao Brewery, for example, trades at 29 per cent higher than its shares in Hong Kong. The differentiated pricing is being spurred by the surge in the mainland stock market that has seen its key index rise 130 per cent last year, marking it the best performer of any exchange in the world for the period. Turnover on the Shanghai exchange in the first 14 days of trading hit 1.2 trillion yuan, almost the total 1.9 trillion yuan turnover for the whole of 2005. Goodbaby's A-share plan was scrapped, however, because it would take at least 18 months for it to be restructured into an onshore, shareholding company required for mainland listing. The company was taken offshore in the leveraged buyout. In addition, if the company had taken the A-share route, there was no guarantee regulators would approve the deal. Credit Suisse and Morgan Stanley were pitching for the mandate, sources said. Goodbaby will compete with a number of IPOs from the consumer sector this year, as companies raise funds for expansion and consolidation in the mainland's fragmented retail market. Hunan Taizinai Group, the mainland's largest maker of milk-based health drinks, plans to raise about US$200 million while Anta (China), a shoe and sportswear label, plans to raise a similar amount. Belle Holdings, a footwear retailer owned by the family of Mirabell International Holdings chairman Tang Wai-lam, plans a far larger US$1 billion IPO. The IPO candidates are banking on the mainland's rising retail sales, which have been boosted by higher incomes, to attract investors Retail sales grew 13.7 per cent last year, slightly faster than in 2005, according to China's statistics bureau. The Ministry of Commerce forecasts retail sales to grow about 11 per cent a year until the end of the decade.