Three sources told Bloomberg that China CNR Corp has chosen three banks for its planned offering in Hong Kong. According to three people knowledgeable about the matter, China's second largest train manufacturer has selected China International Capital Corp, Macquarie Group Ltd and UBS AG for the share sale.
Information from Bloomberg markets showed that China CNR designs, makes, refurbishes, overhauls and maintains rail cars, including electric and diesel locomotives as well as multiple units, traction motors, passenger coaches and freight wagons and rolling stock. It trades on the Shanghai Stock Exchange.
The people who spoke on the condition of anonymity because the information is confidential revealed that China CNR intends to gather up to $1.5 billion for the share sale in Hong Kong scheduled this year. They added that the railmaker still has to lodge its application for the offering with the Hong Kong bourse.
The report said China CNR is looking to raise money as the government grows the biggest high-speed rail network in the world. On January 6, the company said it had inked agreements valued at CNY 28.2 billion or $4.7 billion to sell bullet trains to China Railway Corp, a state-owned company.
By selling stock in Hong Kong, China-listed firms can capitalize on valuations that are usually higher compared to what they would get in the mainland, the report said. Bloomberg data showed that its much bigger rival, CSR Corp, is traded in Hong Kong at 12.1 times its estimated earnings this year. Meanwhile, its shares in Shanghai have a multiple of 11.8. Data revealed that China CNR is doing business in Shanghai at 10.2 times its forecasted earnings this year.
In a statement released on January 2, China CNR said the country's state-owned asset regulator had already given its approval "in principle" of the company's plan to list in Hong Kong, Bloomberg reported.
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