Jiangnan, the third-largest supplier of electric wires and cables in the mainland by sales, plans to raise up to HK$789 million from an initial public offering in Hong Kong despite the recent dull market conditions. Raymond Yeung, ANZ's Greater China region senior economist, said many enterprises were reluctant to go public because 'the external economy has been unstable and unclear in the first quarter,' making market sentiment difficult for raising a satisfying amount of funds. 'In the second quarter, the market will not pick up much,' Yeung said. He expected more IPOs to take place in the latter half of this year 'when the macro economic situation improves and the stock market rebounds'. The Jiangsu-based company manufactures power cables, wires and cables for electrical equipment, as well as bare wires. The sales of power cable made up two thirds of its turnover in 2011. Raw metals, namely copper and aluminium, makes up 80 per cent of the firm's cost. Average copper prices have increased to 68,400 yuan a tonne in 2011 from 42,000 yuan a tonne in 2009. The company's chairman, Rui Fubin, said the price fluctuations of raw materials will not have an impact on the gross profit rate, as the pricing of products will be linked to their cost. The company will offer 384.8 million shares beginning today at a price between HK$1.42 and HK$2.05. The shares will start trading on April 20. Jiangsu said HK$180 million, or about one third of the proceeds from the offering, will be used to expand production facilities for high and ultra-high voltage cables with rated voltages of 220 to 500kV. The company's chief financial officer, Chan Man Kiu, said: 'The gross profit rate of this high-end product is higher than traditional products.' Jiangsu will use 25 per cent of the proceeds to set up production facilities for products for which it forecasts strong demand, including aluminium alloy. It will use 20 per cent of the funds to build manufacturing capacity in South Africa. Though ranked the third largest supplier in the country, Jiangnan has only 1.4 per cent of a highly fragmented market. It said 16 per cent of the proceeds will be used to upgrade existing production facilities and the rest kept for acquisitions. China is the biggest market for Jiangnan, but sales contributions from overseas have grown to 8.7 per cent last year from 2.3 per cent in 2009. The company's revenue in 2011 was 4.93 billion yuan, up from 3.67 billion yuan a year earlier.