XCMG Construction Machinery Co Ltd, China’s largest crane and construction equipment manufacturers is planning to raise 5 billion yuan ($732.5 million) through the sale of new shares.
The funds will be used to “finance new nine new projects and obtain advanced technology through additional research & development”, according to a statement the company filed with the Shenzhen Stock Exchange yesterday.
The company said it will issue between 50 and 165 million new shares in a private placement to 10 unnamed investors. The shares are currently trading at 34.87 yuan ($5) almost twice what they were a year ago.
The Shenzhen listed company claims that the nine projects will add nearly 2.3 billion yuan ($337 million) of extra profit each year after completion. First quarter revenues were 14.2 billion yuan ($2 billion) this year with profits of 1.3 billion yuan ($190 million)
XCMG had said that it is planning an overseas listing sometime in the next three years and this latest fund raising exercise may help prepare the company for such a move. It may also help reduce the company’s high debt levels.