CHINA Railway Group, which is raising up to US$5.5 billion in a Hong Kong and Shanghai initial public offering (IPO), was looking overseas, including Africa and South America, for growth opportunities, executives said yesterday.
The firm, in which China Investment Corp., the country’s newly-established sovereign wealth fund, will buy US$100 million worth of shares, plans to list in Shanghai on Dec. 3 and in Hong Kong on Dec. 7.
China Railway, the world’s No. 3 construction contractor by revenue, aims to lift the share of its revenue generated overseas from under 5 percent now to more than 20 percent in five years.
“I expect we will have rapid overseas development in the coming few years,” chairman Shi Dahua said.
With transport bottlenecks threatening to choke the country’s breakneck growth, the government is investing heavily in transportation infrastructure at home.
At the same time, China Railway is continuing a recent overseas push by domestic firms, many of which are seeking resources to fuel China’s growth.
“Due to historical reasons, our company entered the overseas market quite late,” Shi said. “However, after several years of hard work, we have trained up a batch of talent for overseas operations.”
As part of the Hong Kong portion of the deal, China Railway has secured commitments from nine corporate investors, including China Investment Corp. and the Government of Singapore Investment Corp. (GIC), to buy a combined HK$3.18 billion (US$408 million) worth of IPO shares.
The investment by China Investment Corp. is just the second known to have been made by China’s new US$200 billion sovereign fund. Earlier this year, the fund invested US$3 billion in an IPO by U.S. private equity firm Blackstone Group.
China Railway operates offices in more than 50 countries, including in Africa and Southeast Asia, and is looking to expand in the Middle East, Australia and South America, Shi said.
China aims to increase its operational railway lines to more than 90,000 kilometers by 2010 from 75,438 kilometers in 2005. (SD-Agencies)
