2010-07-22 09:15

A Citic Bank branch in Shanghai. [Shao Chang / For China Daily]

BEIJING - Citic Group, a top Chinese financial conglomerate, may raise as much as 80 billion yuan ($11.8 billion) in a planned initial public offering (IPO) in Hong Kong, sources familiar with the situation said.

The Beijing-based company, which has listed units including Citic Pacific Ltd, China Citic Bank Corp, and Citic Securities, plans to complete its IPO before the end of next year.

If successful, it could be the biggest float in Hong Kong next year, a source from a major mainland brokerage said.

"IPO preparation is now still in the planning stages," one person who has direct knowledge of the matter told China Daily.

Citic Group, the country's largest investment conglomerate owned by the government, aims to raise as much as 80 billion yuan from the share sale, the person said, without specifying how many shares the company planned to sell.

The State-owned investment company plans to list its entire business as a group, the person said. Citic Group is currently ranked 254th in terms of revenue among the top 500 global companies listed by Fortune magazine this month.

The company posted a gross profit of 35 billion yuan in 2009, a 35.4 percent year-on-year rise thanks to the sound performance of its financial services, real estate and industrial investment businesses.

The group's total assets and net assets stood at 2,139.9 billion yuan and 134.8 billion yuan respectively in 2009, up 31.2 percent and 23.1 percent respectively from the previous year.

Citic group owns 44 subsidiaries that operate in the Chinese mainland, Hong Kong, Macao, North America, Australia, southeast Asia, Central Asia, the Middle East, Africa and South America. Its core businesses range from the financial sector to the service industry and include industrial investment.

Analysts said the planned Hong Kong IPO signaled Citic's intention to extend its business and step up overseas expansion through investments in the Hong Kong market.

Although financial and domestic businesses are still the main components of the Citic Group, the company plans to strengthen its non-financial and overseas businesses, particularly in real estate, energy resources and overseas engineering contracting, analysts said.

"The fundraising is expected to further cement the company's position in the investment market as it will give it the financial muscle to expand its business," said Li Dahao, an analyst with China Jianyin Investment Securities.

"We hope the IPO will provide the opportunity for us to boost transformation of our business practice by enhancing cooperation, risk evaluation, strategy management and allocation of resources," said Kong Dan, chairman of Citic group, in an exclusive interview with Century Weekly magazine.