Bloomberg reported that China Railway Materials Co a state owned logistics firm and steel supplier aims to raise as much as CNY 6 billion selling shares in Shanghai to fund expansion.

The company said the Beijing based company will probably sell no more than 2.77 billion shares in Shanghai. It may also offer as many as 1.44 billion shares in Hong Kong including any over-allotment.

Proceeds from the Shanghai sale will go mainly to expand the company domestic logistic bases and operating networks and to replenish working capital. Funds raised in the Hong Kong offering which is subject to regulatory approval market conditions and investor confidence will be used to set up overseas outlets, repay bank loans and boost capital.

The auditing firm which forecast CNY 200 to CNY 250 billion worth of China share sales this year said selling shares may be a challenge in a market where investor appetite has weakened amid Europe debt crisis and China economic slowdown. Initial public offerings on the Shanghai and Shenzhen bourses in the first half of the year raised CNY 77.5 billion. That compares with CNY 286.1 billion in all of 2011.

According to Ernst & Young a regulatory priority this year in China is to keep accelerating listings by state owned enterprises.

Inner Mongolia Yitai Coal Co, China biggest producer of the fuel in the region bordering Mongolia is cutting its fund raising in Hong Kong to USD 1.1 billion from USD 1.5 billion.

China Railway Materials highlighted risks including uncertainties about investment in China railway industry slowing demand for steel and competition. The company boosted profit 47% to CNY 1 billion on revenue of CNY 207 billion in 2011.

CITIC Securities Co is the lead underwriter for its Shanghai offering.

Source - Bloomberg

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