BYD planning to raise $219 million in China IPO

Article by Christian Andrei, on June 20, 2011

Chinese vehicle manufacturer BYD Co., which is backed by Warren Buffett, had priced its initial public offering in Shenzhen at 18 yuan a share, the company said in a statement on Sunday to the Shenzhen Stock Exchange.

With this price, the company will raise 1.42 billion yuan ($219 million) in the IPO, weighed down by worries over its poor performance and weak investor sentiment. This is lower than what the company had initially expected to raise, which is 2.19 billion yuan from the share sale.

At 18 yuan a share, the IPO valued the company at 15.9 times consensus 2011 earnings forecasts and marked only a marginal 0.8 percent premium to the company's Hong Kong-listed shares.

The company's Hong Kong-listed shares were last traded at HK$21.50 per share. Even with the modest deal size, BYD's listing on the Shenzhen Stock Exchange was closely monitored in China because of the chance of local fund managers to participate in the vehicle manufacturer that Buffett invested in 2008.

Other mainland IPO hopefuls, like New China Life, Citigroup-controlled Guangdong Development Bank, and several Hong Kong-listed Chinese vehicle makers, are also hoping for the deal to determine the market demand.

BYD was selling a maximum of 79 million shares in the IPO. According to the IPO prospectus, proceeds from the sale will be utilized to finance the company's lithium ion project, expand its range of products and add to research and development.

Topics: byd, china, ipo

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