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SCMP Reporter

GUANGDONG Investment is considering several options to raise funds to finance a flurry of acquisitions which are expected to take place in the next few months.

  It is believed that one of the options is to issue $1 billion in convertible bonds to fund the acquisition of a second power plant in Shaoguan; a leather manufacturing plant and a steel plant in Guangdong; and a cement plant.

  Guangdong Investment directors were unavailable to comment on either the fund-raising activities or the acquisitions.

  The total investment for the second power plant in Shaoguan, of 400 mega-watt capacity, would be $750 million. Guangdong Investment would take a 45.9 per cent stake in the plant. The rest would go to its parent Guangdong Enterprises Holdings.

  The leather plant, located in Nanhai, is the biggest leather manufacturing plant in Asia. The steel plant in Guangzhou produces 600,000 tonnes of steel products a year.

  The company has applied to list American Depositary Receipts (ADR) in the United States.

  A company spokeswoman stressed the ADRs did not involve any share issue, and the firm was waiting for approval from the US authorities.

  Guangdong Investment is holding a roadshow in the US at the moment. The company's directors will return to Hong Kong early next month.

  Local fund managers will be invited to Panyu on August 7 to visit the firm's property development projects.

  Meanwhile, the company has been tipped by local brokerages to become a constituent stock of the Hang Seng Index after Jardine Matheson and Jardine Strategic Holdings de-list at the end of this year.

    Given Guangdong Investment's large market capitalisation (over $7 billion, which is similar to that of Mandarin Oriental), analysts believe it is one of the likely potential candidates to replace Jardines.

  Over the past year, asset injections from its parent have bolstered Guangdong Investment's manufacturing interests. These assets include Shenzhen Brewery, Guangzhou Malting, Zhongshan Weili Washing Machine and Full Arts, which is an aluminium manufacturer.

  Consequently, this division saw its profit contribution rise sevenfold to $74 million last year. Analysts predict earnings from the company's manufacturing subsidiaries will triple by 1996 to $226 million.

  Last September, the company listed Full Arts on the Australian Stock Exchange.

  Analysts believe this listing is likely to be followed by Zhongshan Weili Washing Machine, which needs more working capital to expand business.

  In addition, Guangdong Investment acquired two hotels from its parent company this year, making a total of six hotels - or 1,211 rooms - in Hong Kong.

  Guangdong Enterprises recently reached agreement with a third party to build a pay-toll road in Shenzhen.

    Total investment is estimated to be US$400 million (about HK$3 billion) and it is believed that Guangdong Investment is likely to take a certain stake in the venture.



Guangdong Investment seeks $1b for acquisitions