HONG KONG--With China car sales rising, auto dealer China Grand
Automotive Services Co. is planning to boost the size of its Hong
Kong initial public offering to up to US$1 billion from US$800
million, people with knowledge of the matter said.
The Shanghai-based company, in which U.S.-based private-equity
firm TPG Capital has a stake, is awaiting listing approval from the
Hong Kong Stock Exchange. It is likely to get approval sometime in
the second quarter, the people said Monday.
China Grand Automotive's decision to raise the amount it plans
to seek from the market isn't surprising, as China's car sales saw
a strong pickup last year. China overtook the U.S. as the world's
largest auto market in terms of sales in 2009, after which growth
tapered off. But passenger and commercial vehicle sales gathered
pace again in 2013 with a 14% annual rise, the biggest increase in
three years, according to official figures.
The surge in car sales has prompted another Chinese car firm,
this time a manufacturer, to look into a Hong Kong listing this
year. BAIC Motor, a Chinese car maker partly owned by Daimler AG,
is gearing up for an IPO in Hong Kong valued at about US$2 billion
in the first half of the year, other people familiar with the
situation said earlier.
Also helping China Grand Automotive's valuations is a deal in
the sector that showed the increasing popularity of car companies.
Shares of China Grand Automotive's rival Zhongsheng Group Holdings
have risen 2.3% after it sold a stake to a unit of Jardine Matheson
Group, one of East Asia's oldest trading firms, for around US$731
million last month. In that time, Hong Kong's benchmark Hang Seng
Index has fallen around 7%.
China International Capital Corp., Goldman Sachs Group Inc.,
Citic Securities International, Citigroup Inc., HSBC Holdings PLC,
and UBS AG are underwriting China Grand Automotive's IPO, the
people said earlier.
China Grand Automotive tried to launch the deal nearly four
years ago, but it wasn't clear why it decided not to pursue an IPO
in the end.
TPG has been selling out of some of its financial assets in Asia
in recent months, but it isn't clear whether it will sell out when
China Grand Automotive floats. The firm reached an agreement to
sell a 40% stake in an Indonesian lender to Japan's Sumitomo Mitsui
Financial Group Inc. last year for around US$1.52 billion, for
example. The private-equity firm also sold a leasing business in
China to domestic player Haitong Securities Co. for US$715 million
in cash last year.
TPG Capital couldn't be reached for comment.
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