SHANGHAI (Dow Jones)--China Shipbuilding Industry Co. (601989.SH) said Wednesday it will start a roadshow Thursday for its A-share initial public offering, which will raise at least CNY6.44 billion ($942 million).
The plan to launch the roadshow comes shortly after China's main stock market suffered its biggest single-day fall in nearly three months Tuesday. The securities regulator's approval of the sale suggests it isn't concerned about the latest correction, but is instead more concerned about the risk of an asset bubble forming, analysts said.
China Shipbuilding, the country's largest ship equipment maker, said it plans to sell up to 1.995 billion shares, or 30% of its enlarged share capital, before listing on the Shanghai Stock Exchange.
It didn't provide an indicative range for the share sale or say how much it plans to raise, but it said it will use CNY6.44 billion of the proceeds to increase production capacity.
The Beijing-based company said it will accept share subscriptions from Dec. 4 to Dec. 7.
China International Capital Corp. will underwrite the deal.
Analysts said China Shipbuilding's imminent IPO, while not necessarily a sign of a hastened pace of new share supply, suggests the regulator plans to allow the supply of shares to increase to help cool the domestic stock markets, which have risen sharply this year.
China Merchants Securities Co.'s (600999.SH) IPO, which raised US$1.62 billion from the sale of 358.5 million yuan-denominated A shares two weeks earlier, was the last large share offering in China.
"It's very healthy and normal to let the stock market correct for a while after it accumulates such strong gains," said Li Nian, an analyst at Shenyin Wanguo Securities.
The benchmark Shanghai Composite Index ended down 3.5% at 3223.53 Tuesday after gaining 11.44% so far this month. The fall was the biggest one-day drop since Aug. 31, when the index plunged 6.7% to 2667.75.
The Shanghai index ended up 2.1% at 3290.17 Wednesday.
Tuesday's plunged was due to concerns over the prospect of a tighter monetary policy and potential large-scale fundraising by Chinese banks after the country's banking regulator warned commercial lenders to strictly comply with capital requirements.
"Even so, the securities regulator didn't show any intention to let the IPO supply slow down as there is too much liquidity in the market," said an investment banker who declined to be named.
The list of companies seeking regulatory approval for IPOs is already thinning less than six months after the securities regulator reopened the market in late June, following a nine-month hiatus. Among the companies that have secured initial regulatory approval, railway transportation equipment maker China CNR Corp. is the only heavyweight candidate that has yet to launch an IPO.
