Air China Sets Prices for Domestic IPO, Looking to Raise one bln dlrs

Posted 03 August 2006 @ 11:10 am EET     Print     Reprint     E-Mail     Comments

SHANGHAI (AP) - Air China set the price range for its domestic initial public offering (IPO), with the national flag carrier aiming to raise up to 8.0 billion yuan (one billion dollars) from the share issue.

The company will issue 2.7 billion A-shares, which comprise 22.25 percent of its total equity, at between 2.75 yuan and 2.95 yuan per share, it said in a statement to the Shanghai Stock Exchange.

This translates to a price-earnings ratio of between 20.07 and 21.53 times the company's diluted earnings in 2005, the statement said. It did not give a date for the listing but reports have said the company, already trading on the Hong Kong and London stock exchanges, will debut in Shanghai by August 22.

The proceeds of the share sale will be used to purchase new aircraft, including 20 Airbus 330-200s, 15 Boeing 787s and 10 Boeing 737-800s, and to expand its operations at Beijing Capital International Airport, the carrier said. Seven strategic investors, including the People's Insurance Company of China and Yangtze Power, have agreed to buy a total of 350 million A-shares.

Air China's listing will add to a fast-growing group of Chinese majors looking to raise funds on the Shanghai Stock Exchange after a year-long suspension of IPOs ended in May. The Industrial and Commercial Bank of China (ICBC), the country's biggest lender, last month was given central government approval for a dual listing in Hong Kong and Shanghai.

The Bank of China raised 19.99 billion yuan in the biggest-ever IPO in Shanghai on July 5 having already garned more than 11 billion dollars in a Hong Kong float. Most new listings do very well but on Tuesday, Daqin Railway disappointed with a gains of only 11.5 percent in a weakening market. Daqin Railway, the second largest domestic IPO after Bank of China, issued a total of 3.03 billion A-shares, with 60 percent reserved for institutional and strategic investors.