By Mao Lijun (China Daily)
Updated: 2008-01-03 09:46

China Railway Construction Corp (CRCC), the country's second largest construction firm, is likely to go public in Shanghai and Hong Kong in March, according to sources.

The State-owned CRCC is expected to raise 25 billion yuan ($3.42 billion) by issuing 2.8 billion A shares and 2 billion H shares.

Its initial public offering (IPO) is on track to be the mainland's largest in the first quarter, based on Thomson Financial data.

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The Shanghai IPO price could be 4-5 yuan per share and its H shares will be no less than HK$5 apiece.

Its Shanghai listing is expected in late March, while the Hong Kong listing is slated for a few days after that, said the sources, who declined to be named.

The company filed its listing applications to the China Securities Regulatory Commission and hired CITIC Securities Co, Citigroup Inc and Macquarie Bank Ltd to prepare and manage its share sales in Shanghai and Hong Kong.

Funds raised from the share sale will be used for equipment, capacity expansion and technology upgrades, an analyst said.

The nation is trying to boost its operational railway lines from the current 78,000-km network to more than 90,000 km by 2010. CRCC is seeking funds to help it compete for contracts as the government expands transport networks.

"Capital is a key element in the construction industry," said Chen Yicong, an analyst with Southwest Securities. "It determines whether the contractor has the ability to carry out large projects."

"Railway construction investment will be huge in the next few years in China, and this will give the company a huge opportunity to expand in the boom, given the company's leading position in the industry," Chen said.

The government earmarked more than 5 trillion yuan for transport infrastructure in the current Five-Year Plan (2006-10), including 1.25 trillion yuan for railways - four times the amount in the previous plan period.

CRCC posted 150 billion yuan in turnover last year and won high-profile projects including the Qinghai-Tibet Railway and the Shanghai Maglev line.

Its biggest rival, China Engineering Construction Corp, raised 22.4 billion yuan in its Shanghai offering and another HK$19.2 billion when it listed in Hong Kong in November.

Established in 1948 as the railway arm of the People's Liberation Army, CRCC was transferred to the Ministry of Railways in 1984 and is now under the administration of the State-owned Assets Supervision and Administration Commission.