Shanghai Automotive Industry Corp. (SAIC), one of China's leading automakers, announced over the weekend it planned to establish a shareholding company to hold its auto assets as it was preparing for an initial public offering (IPO).

Under the plan, part of the assets to be transferred into the new company would be SAIC's 70 percent stake in its Shanghai-listed arm, Shanghai Automotive Co., SAIC said in a statement.

Establishing the new company, Shanghai Automotive Group, was an initial step to raise up to US$2 billion in an IPO in Hong Kong in mid-2005, the company said.

The company has also been reportedly considering a listing in New York, Shenzhen Daily reported Tuesday.

It had received approval from the Shanghai Municipal Government for the shareholding company, but was still waiting for the nods from the State-owned Assets Supervision and Administration Commission, SAIC said.

The company has 62,460 employees and had net assets worth 33.1 billion yuan (US$4 billion) by the end of last year.

It has been a long-time partner with global auto giants including General Motors Corp. of the United States and Germany's Volkswagen AG, which have helped it carve a large share in the fast-growing Chinese market.

Last month, it acquired a controlling 48.9 percent stake in Ssangyong Motor Co., South Korea's fourth-largest automaker, for about US$500 million.

SAIC is also in talks with British automaker MG Rover Group Ltd. over a cooperation project, which would involve developing and manufacturing in both markets.

Many analysts believe its IPO will help fund some of these overseas projects.

Source: Shenzhen Daily