China Railway Construction plans to raise as much as RMB22.25 billion ($3.11 billion) in its Shanghai initial public offering after setting its price range.

It proposed a range of RMB8 to RMB9.08 for the offer price of its Shanghai sale, which will be followed by a Hong Kong float, the nation’s second-largest infrastructure contractor said yesterday.

The range will represent a price/earnings ratio of 26.92 to 30.56 based on its 2007 net profit.

Officially the company said, ‘As major IPOs on the Chinese mainland have all fixed their offer prices at the top of the indicated ranges since 2007, it should be no problem for China Railway Construction to follow suit.

Subscriptions for China Railways Construction’s IPO have opened and trading will start in the first 10 days of March.

The company has said it will use proceeds of the Shanghai sale to buy construction equipment, expand machinery production, develop the property sector, finance construction of a passenger rail line and repay bank loans, with a combined cost of RMB15.87 billion.

China Railway Construction, which has just won tenders to build rail projects in Libya, is China’s top rail builder by overseas contracts.
Source: China View