The mainland's flag carrier Air China has invited bids from investment banks for an initial public offering (IPO) in Hong Kong that could raise up to US$500 million, a report said.

The Financial Times reported China National Aviation Holding Co, the parent of Air China, has invited a small group of underwriters to pitch for the IPO, which is targeted for 2004. It is expected to select the advisers early next year.

Air China, the country's largest airline in terms of assets, had initially planned to list last year but postponed the IPO to 2004. The report did not give a reason for the postponement.

Bankers said Air China could raise US$300-500 million by selling a stake of some 25-30 per cent to investors.

That would give Air China a market capitalisation of up to two billion dollars, in line with the valuations of Hong Kong-listed China Eastern Airlines and China Southern Airlines.

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