Cars

BYD gets OK for Shenzhen share sale

By Tian Ying (China Daily)
Updated: 2011-05-11 09:34

BEIJING - BYD Co Ltd, the Chinese carmaker backed by Warren Buffett, has won regulatory approval for a share sale on the Shenzhen Stock Exchange to fund its expansion in the world's biggest vehicle market.

The China Securities Regulatory Commission approved the planned issue of A shares, according to a statement posted on its website on Monday.

Hong Kong-listed BYD is awaiting written approval and will announce details of its Shenzhen offering later, according to a Hong Kong Stock Exchange filing on Monday.

BYD plans to offer as many as 79 million shares in Shenzhen, where the company is based, according to a May 5 statement to the Hong Kong bourse.

Related readings:  Sharp growth in BYD Q1 profits  BYD April car sales down 11% Y-O-Y  BYD launches G6 1.5 Ti  BYD says to restart construction of Xi'an plants

The automaker said it will use the proceeds to develop its auto and rechargeable- batteries businesses, and to expand into car products and accessories.

"BYD has urgent demand for capital to fuel its expansion," said Zhang Xin, a Beijing-based analyst with Guotai Junan Securities Co. "With sales plunging, IPO pricing will be a key to make BYD attractive to investors."

BYD's vehicle sales fell for nine straight months through April amid rising competition from rivals General Motors Co, Volkswagen AG and Nissan Motor Co.

MidAmerican Energy Holdings Co, a unit of Buffett's Berkshire Hathaway Inc, bought 9.9 percent of BYD in September 2008.

The carmaker raised HK$1.4 billion ($180 million) in an initial public offering in Hong Kong in July 2002 by selling shares at HK$10.95 each. The stock has declined 60 percent in the past year.

Bloomberg News