China’s second-largest vehicle maker, Shanghai Automotive Industry Corp (SAIC), plans to list shares in its entire business, possibly overseas, as it gears up to become a global brand, Reuters reported, citing state media.
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The report said the news came the same day as a source told Reuters that China’s third-largest vehicle maker, Dongfeng Motor Corp, had chosen its bankers for a Hong Kong IPO previously valued at roughly $US1 billion.
Reuters noted that many of China’s largest companies list only a portion of their business but several Chinese companies are considering listing their entire group, following a lead set in January by mobile phones and televisions giant TCL Group.
Shanghai Auto, a Chinese partner of General Motors and Volkswagen’s Shanghai ventures, would either invite strategic investors or use its listed vehicle in Shanghai – Shanghai Automotive Co – for its new listing, the official Shanghai Securities News said, according to the report; the listing would take place over the next few years.
“Shanghai Auto plans to complete asset restructuring within two years and aims to list as a group,” a newspaper quoted the company’s president, Hu Maoyuan, as telling a shareholders’ meeting of its listed vehicle on Monday, Reuters added.
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By GlobalData“The world’s major auto makers are all already listed and so this is the right way to go for the firm,” analyst Xu Xiang at China Southern Securities told Reuters, adding: “Plus the government has been encouraging large state-owned firms to list in their entirety.”
The newspaper reportedly quoted Hu as saying that Shanghai Auto’s sales hit 186.2 billion yuan ($US22.5 billion) in 2003 – vehicle sales were expected to exceed one million for the first time in 2004 from just over 800,000 units in 2003.
Reuters said Shanghai Auto is already a part owner of South Korea’s Daewoo Motors, which it bought into in 2002 along with General Motors and Suzuki and has also been keen to purchase South Korea’s debt-laden Ssangyong Motor.
“Time is of the essence for Shanghai Auto, because if they wait too long to list they’ll never be able to compete with the world’s major auto companies,” analyst Gu Qing at Haitong Securities told Reuters, adding: “Expanding overseas is something they have to do.”
