China Railway Signal seeks up to US$1.8b in HK IPO

[SINGAPORE] China Railway Signal & Communication Corp, the world's biggest provider of train traffic control systems, is seeking to raise as much as US$1.8 billion from a Hong Kong initial public offering.

The Beijing-based company is selling 1.75 billion shares at HK$6.30(81 US cents) to HK$8 apiece, according to terms for the deal obtained by Bloomberg. Sixteen cornerstone investors, including China Railway Group Ltd. and Shanghai Zhenhua Heavy Industries Co, have agreed to buy more than half the offering.

China Railway Signal is seeking to become the first major new listing in Hong Kong since a China stock rout wiped out US$4 trillion in value and triggered unprecedented government intervention to support equities. The deal will add to the US$18.5 billion raised by first-time share sales in the city this year, data compiled by Bloomberg show.

Beijing Infrastructure Investment Co. has agreed to buy US$60 million of stock in the offering, while China Shipping Group Co will invest $100 million and China Life Insurance Co. has committed US$50 million, according to the terms. So-called cornerstone investors typically agree to hold on to their shares for six months in return for guaranteed allocation.

China Railway Signal plans to price the offering on July 31 and start trading on Aug 7, the terms show. Citigroup Inc, Morgan Stanley and UBS Group AG are joint sponsors of the listing, while Macquarie Group Ltd. is financial adviser.

BLOOMBERG