China Railway Group plans to raise up to 12 billion yuan (HK$14.9 billion) through private share placement to its parent company and a select group of institutional investors to fund existing infrastructure projects on the mainland and repay loans.
The Shanghai- and Hong Kong-listed company told the stock exchanges on Wednesday that it planned to issue 1.56 billion shares, of which at least a fifth would go to its parent, China Railway Engineering Corporation (CREC).
No more than nine other institutional investors will get the rest. The shares are to be issued at no less than 7.65 yuan apiece – a 10 per cent discount to the average price in the last 20 trading days.
China Railway said the funds will be used to finance subway and expressway construction projects in five mainland cities as well as to repay bank loans.
CREC will retain at least a 51 per cent stake in China Railway after the placement.
The new shares will be listed in the Shanghai bourse.
