China CNR Corp. raised 13.9 billion yuan ($2 billion) selling shares in Shanghai, capping the country's status as the world's biggest market for initial public offerings this year.
The maker of rail cars used in Beijing's subway sold 2.5 billion shares at 5.56 yuan apiece, the top of its price range, according to a filing to Shanghai's stock exchange today.
The sale brings the amount raised by Chinese companies in mainland IPOs to 199 billion yuan this year, according to the Securities Times, as record lending and government stimulus revive the economy. CNR will use funds to boost the production of trains as China spends 5 trillion yuan to expand its rail network to a total 120,000 kilometers (75,000 miles) by 2020.
The IPO price values Beijing-based CNR at 49.21 times its 2008 earnings a share, according to the filing. That compares with the 32.42 average price to earnings ratio of the benchmark.
Institutional investors ordered 62.1 times the 35 percent of the shares available after a so-called clawback arrangement through an offline sale. The remaining 1.625 billion shares were 74 times oversubscribed to both retail and institutional investors in an electronic tranche.
The Chinese manufacturer plans to use the proceeds to make high-speed trains and parts and to import technology related to high-speed trains, according to a prospectus filed to the Shanghai bourse on Dec. 10.
Expanding Network
China will own more than half of the world's high-speed railways under the plan to expand the rail network.
CNR is 91.2 percent owned by China Northern Locomotive, one of the 136 companies overseen by the State-Owned Assets Supervision and Administration Commission. The company was reorganized from state-owned China Northern Locomotive & Rolling Stock Industry (Group) Corp. in 2008.
China South Locomotive & Rolling Stock Corp., CNR's main competitor, sold shares in an initial public offering in Hong Kong and Shanghai in August 2008, raising $1.48 billion.
China International Capital Corp., Huatai Securities Co. and Huarong Securities Co. are arranging CNR's share sale.
