Geely Automobile Holdings, the mainland's largest privately owned carmaker, is raising up to HK$648 million by placing new shares to investors to fund its new production facilities, market sources said. Geely hired Deutsche Bank to help sell 600 million new shares, or 14.4 per cent of its enlarged share capital, at an indicative range of 98 HK cents to HK$1.08 each, according to a sale document obtained by institutional investors. The price represented a discount of as much as 13.27 per cent to yesterday's close of HK$1.13, when the stock jumped 17.71 per cent. Geely's shares have gained 33 per cent this year. 'The offering seems a bit expensive as China's car market has not yet rebounded strongly,' a fund manager said. Geely's placement comes amid its active expansion overseas, including a plan to assemble its high-priced model Free Cruiser in Indonesia and Russia. In a recent research note, Citigroup said there were talks of establishing assembly plants in Turkey and Mexico with initial production targets of 50,000 units each. 'The move is positive for the firm as it can help increase its export mix from only 7 per cent to more than 20 per cent by 2008. Secondly, the vehicles could be sold for more than the local price,' an analyst said. Geely's sales volume rose 7 per cent last month from the same period a year ago to 20,009 units. Citigroup expected its sales to gain 42 per cent this year to 250,000 units, higher than a Geely management forecast of 240,000 units. The mainland overtook Japan as the world's second-largest car market last year, when sales jumped 25 per cent to 7.21 million units. Passenger car sales contributed 33 per cent of growth while commercial units increased 16 per cent.