China Railway Signal & Communication Corp (CRSCC), the world's largest builder of rail traffic control systems, plans to raise up to $1.8 billion in a Hong Kong listing, IFR reported, seeking funds to boost acquisitions, research and production. The company is offering 1.75 billion new shares, or about 20 percent of the enlarged share capital, in an indicative range of HK$6.30 to HK$8.00 each, Thomson Reuters publication IFR said on Friday, citing people familiar with the plans.
The deal, set to be priced on July 31, will be Hong Kong's second-largest initial public offering this year after the $2 billion listing of Lenovo Group's parent Legend Holdings Corp in June. It comes on the back of a renewed Chinese government push to bolster rail and other infrastructure investments. Equity capital markets activity in Hong Kong has soared in recent past months, led by a slew of share sales from companies already listed in Shanghai and Shenzhen including brokerages Huatai Securities Co Ltd and GF Securities.
An official at China Railway Signal's publicity department declined to comment on the IPO plans. China Railway Signal, which supplies equipment and services to over 20 countries, posted a net profit of 2.04 billion yuan ($329 million) in 2014 on revenue of 17.3 billion yuan, up from a profit of 1.2 billion yuan and revenue of 13.1 billion yuan a year earlier. The IPO's price range represents a forward price-to-earnings ratio of 19-24 times, IFR reported. Beijing is looking to pump more cash into infrastructure to stave off a sharp economic slowdown. The country invested more than 265.1 billion yuan in domestic railway construction in the first half of the year, putting an additional 2,226 kilometres of new lines into service, the official Xinhua news agency said on Thursday.