BAIC Motor is planning to raise up to $2 billion in an initial public offering in Hong Kong, higher than its initial target of nearly $1 billion last year. The listing is expected to take place in the second quarter of 2014, sources privy with the IPO plans told Reuters. According to industry executives and analysts, an expected series of economic stimulus measures and strong demand for cars in smaller Chinese cities in interior regions will boost the industry’s performance in China.
"China's auto industry is in the midst of a recovery, and is likely to grow 8 to 10 percent a year over the next few years," Liang Yonghuo, an analyst at Haitong International Research Ltd., told Reuters. Daimler holds a 12-percent stake in BAIC Motor following a EUR640-million agreement inked in November 2013.
The stake acquisition was designed to boost Daimler’s presence in China and secure a foothold before the BAIC Motors’ IPO. The listing could help finance the goal of BAIC Motors’ parent -- Beijing Automotive Group -- to join the ranks of SAIC Motor, Dongfeng Group and FAW Group as the Chinese government tries to consolidate the auto industry and create globally competitive companies.
Beijing Automotive Group logged a 19-percent surge in sales in 2013 to over 2 million vehicles. The company has been expanding through acquisitions as it targets to almost double annual output capacity to around 4 million vehicles by 2015.