* Sale seeks to benefit from China's booming auto industry
* Offering worth up to $2 bln expected in 2nd quarter - IFR
* Citic, Deutsche Bank, HSBC added to underwriting team
By Elzio Barreto and Fiona Lau
HONG KONG, Jan 17 Chinese carmaker BAIC Motor,
part-owned by Daimler AG, plans to raise up to $2
billion in a Hong Kong initial public offering, hoisting its
target as China's auto industry purrs to solid growth.
Fueling BAIC Motor's ambitions, the world's biggest auto
market is moving toward a second year of double-digit sales
increases. A year ago, in the early planning stages, BAIC
Motor's target was closer to $1 billion.
Thomson Reuters publication IFR reported on Friday the
listing will come in the second quarter of 2014, citing sources
familiar with the plans.
If successful, BAIC Motor's deal would be among the world's
top five IPOs by value in the auto industry, according to
Thomson Reuters data. Most major players have been publicly
listed for decades.
The sale will provide fresh impetus for the Hong Kong
financial industry's own recovery. Advisory firm PwC estimates
Hong Kong IPOs could raise $32.2 billion in 2014, the highest
since 2010 and nearly double the 2013 tally of $17.1 billion.
BAIC Motor's ambition also reflects confidence that Hong
Kong investors will buy into companies with strong growth
prospects. In the city's biggest listing so far this year,
tycoon Li Ka-shing's Power Assets Holdings Ltd plans
to raise $3.6 billion in an electricity business IPO.
This year's expected strong showing in China's auto market
will be spurred an anticipated array of economic stimulus
measures, as well as robust demand for cars in smaller cities in
interior regions, according to industry executives and analysts.
"China's auto industry is in the midst of a recovery, and is
likely to grow 8-10 percent a year over the next few years,"
said Liang Yonghuo, an analyst at Haitong International Research
Ltd. in Shenzhen.
BAIC Motor is the passenger car unit of ambitious
state-owned Beijing Automotive Group (BAIC). In
November, high-end German auto maker Daimler sealed a deal to
buy a 12 percent stake in BAIC Motor for 640 million euros ($871
million) to boost its China presence and secure a foothold
before the long-expected IPO.
Daimler's Mercedes-Benz brand is now the smallest of the big
three German luxury carmakers, after BMW and
Volkswagen's Audi, because of difficulties in
cracking the China market. Daimler's rivals together dominate
the global market for high-end saloons and sports-utility
The listing could fund Beijing Automotive Group's ambition
to join the ranks of SAIC Motor, Dongfeng Group
and FAW Group as the government tries to consolidate
the industry and form globally competitive companies.
The parent of BAIC Motor and Daimler didn't return requests
for comments on the IPO.
Beijing Automotive Group's sales jumped 19 percent last
year, exceeding two million vehicles for the first time. It has
been actively expanding through acquisitions as it aims to
almost double annual output capacity to four million vehicles by
The fast-growing group last year acquired two small local
players, and said it was seeking to buy "a mid-to-high-end
European auto brand" to accelerate global expansion.
Its passenger car unit BAIC Motor has joint ventures with
both Daimler and South Korea's Hyundai Motor and
also sells its locally created brand, Senova. It offers a wide
spectrum of vehicles, ranging from premium sedans and low-end
cars to SUVs and commercial vehicles.
Goldman Sachs and Morgan Stanley have been
working on the BAIC IPO since 2013.
BAIC Motor has now added Citic Securities International
, Deutsche Bank and HSBC to the
roster of banks managing the deal after a pitching process for
mandates last month, IFR said.