* Sichuan Expressway to float 500 mln shares in Shanghai
* Shanghai IPO to raise at least 1.4 bln yuan to buy assets
* Shanghai shares will likely have huge premium over HK
By Shen Yan and Simon Rabinovitch
BEIJING, July 1 Chinese regulators have given
Sichuan Expressway Co (0107.HK) final approval to float shares
in Shanghai in the mainland's first major IPO since last
September, which will raise at least 1.4 billion yuan ($205
"The China Securities Regulatory Commission chairman has
signed the final approval notice for the firm to issue shares,"
a source familiar with the deal said on Wednesday. He could not
be quoted by name as he was not authorised to talk to the media.
The Hong Kong-listed toll road operator will issue up to 500
million yuan-denominated A shares on the Shanghai Stock
Exchange, or 16.35 percent of its expanded share capital after
the IPO, according to the source and the firm's draft prospectus
issued in June 2008 when it won initial regulatory approval.
China has given approval to three smaller companies,
including traditional Chinese medicine maker Guilin Sanjin
Pharmaceutical Co, to launch offerings on the Shenzhen Stock
Exchange since last month's lifting of a quiet ban on IPOs.
That ban was imposed last year during a market slump but
China's stock market has since rebounded, with the benchmark
index .SSEC surging more than 60 percent so far this year on
ample liquidity in the financial system and signs that the
economy is recovering from the global financial crisis.
In its draft prospectus, Sichuan Expressway said it would
spend 1.1 billion yuan to buy expressway assets from its
Based on the HK$3.17 value of Sichuan Expressway's Hong
Kong-listed shares, the company would be able raise 14 billion
yuan, but the mainland-listed A shares of dual-listed Chinese
firms often enjoy huge premiums over their Hong Kong-listed
The average premium of domestically listed Chinese shares
over Hong Kong-listed shares in the same firms .HSCAHPI was at
38 percent at the close on Tuesday, while the premium of a
comparable company, Shenzhen Expressway (600548.SS)(0548.HK),
stood at 81 percent. Hong Kong's financial markets were closed
on Wednesday for a holiday.
Chinese investors also typically favour IPO shares, which
will likely give Sichuan Expressway's valuation a substantial
boost in the Shanghai offer.
Guilin Sanjin, the first offer in Shenzhen in this year's
IPO resumption, was 584 times subscribed for the key retail
portion of its issue on Monday. It attracted a huge 455 billion
yuan in investor subscription funds, including the smaller
The drugmaker raised 44 percent more in proceeds than it had
expected for its IPO after pricing the shares at a hefty
valuation of 33 times against historical earnings.
The second IPO, Zhejiang Wanma Cable Co, to be subscribed on
Thursday, has been priced at 31 times earnings, compared with an
average 25 times historical earnings for Chinese A shares.
Around 30 other companies, including Everbright Securities,
a top-10 brokerage, and China State Construction Engineering
Corp, the country's biggest home builder, have also won initial
approval to go public and are on a waiting list for the final
The resumption of IPOs is expected to push at least 100
billion yuan in new shares onto the mainland markets this year,
according to Reuters calculations.
(Writing by Lu Jianxin; Editing by Edmund Klamann)