Railroads News
- Rail builder eyes Shanghai, HK listings
Date: 10-Aug-2007 Sources: (Shenzhen Daily)
CHINA Railway Engineering Group Co., the country's biggest railroad builder, may launch its US$1.5-US$2 billion initial public offering (IPO) in Shanghai first, then Hong Kong, in order to address a valuation gap between the two markets, sources familiar with the matter said Thursday.
For nearly a year, the government has suspended new approvals for State-owned companies looking to list in Hong Kong due to massive demand in the booming mainland markets. The gulf in valuations between Hong Kong and Shanghai also makes it difficult to price simultaneous listings.
The mainland stocks of dual-listed companies trade at an average 61.5 percent premium to their Hong Kong shares.
State-owned China Railway Engineering Group has won approval from the State Council for a simultaneous listing in Hong Kong and Shanghai, but is still waiting for consent from the China Securities Regulatory Commission, the sources said.
'The firm and the mainland authorities are considering listing domestic A shares first. Then, one or two months afterwards, it would list Hong Kong H shares,'a source said.
'If it does so, the offering price of the Hong Kong H shares could be fixed at a discount to the domestic A shares,'he added.
The question, he said, was whether the company and mainland authorities would accept that arrangement.
The Ministry of Railways has made financial reform of the sector a priority, urging railway operators and equipment makers to list their shares to boost capital and strengthen management.
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