SHANGHAI: Chinese car maker BYD, backed by US billionaire Warren Buffett, said it would seek to raise a smaller-than-expected 1.4 billion yuan ($219.4 million) in its initial public offering (IPO).
The company, which plans to issue up to 79 million A shares before listing on the stock exchange of the southern Chinese city of Shenzen, set an IPO price of 18 yuan per share, according to a statement filed with the bourse late Sunday.
A shares are denominated in yuan and are intended solely for Chinese investors.
The IPO price, which indicates BYD would raise about one-third less than originally planned, is based on a variety of factors including prices offered by institutional investors, the firm's fundamentals and the market situation, it said.
The company had indicated earlier that the IPO was originally expected to raise 2.19 billion yuan.
It said the proceeds were to be invested in a lithium-ion battery project, a research and development centre, and an expansion of its product line, which require total investments of around 5.4 billion yuan.
BYD, already listed in Hong Kong, will start taking subscriptions for the offering from Tuesday.
The offering comes at an uncertain time for China's auto market, the world's largest.
The sector has lost some steam after the government phased out most sales incentives implemented to cushion the impact of the worldwide economic downturn.
China's auto sales fell 3.98 percent from a year earlier to 1.38 million units in May, declining for the second straight month in a clear sign that the growth, which stood at more than 32 percent in 2010 year, is cooling.
China's stock market has also fallen sharply this year on concerns over rising inflation and a possible hard landing for the economy. The benchmark index closed at its lowest level in more than eight months on Friday.
Shenzhen-based BYD, which began as a manufacturer of rechargeable lithium-ion and nickel batteries, drew international attention when Buffett bought a 9.89 percent stake in the company in 2008 for $230 million.
Last year, BYD's car sales in China hit 519,800 units, up 15.9 percent from 2009, but 13 percent below its target of 600,000.
A BYD spokesman said in April that the company's auto sales were expected to grow 10 to 15 percent in 2011.
Copyright AFP (Agence France-Presse), 2011