FUJI Food and Catering services, the third-largest caterer in Shanghai, is seeking to raise as much as HK$275 million in an initial share sale to compete with foreign rivals in the mainland market, sources said Wednesday.

The company faces direct competition from two larger international rivals, Compass and Sodexho Alliance, Shenzhen Daily reported Friday.

In a bid to attract investors, the company brought in CLSA Private Equity Fund as a strategic investor. The French fund bought US$4 million (HK$31.2 million) worth of convertible bonds, which, if fully converted, would give it 8.39 percent of the enlarged share capital of the company.

Market sources said the share sale was fully subscribed after the first day of an international roadshow.

The company plans to sell 100 million new shares, representing 25 percent of its enlarged share capital at an offering price of between HK$2.25 to HK$2.75.

That would value the company at between 7.5 times and 9.2 times forecast 2004 earnings.

Fuji says it expects its net profit will increase by more than 50 per cent to 127 million yuan for the year ending March 2005, compared to 82.6 million yuan a year earlier.

The company will use about a third of the proceeds, or HK$94 million, to build three processing centers on the mainland, in an effort to provide a ��one-stop solution���� for clients, the source said.

Two mid-sized investment banks, SBI E2-capital and CAF Securities, were the joint global sponsors. Book-building for the deal opened yesterday and will close Dec. 6. It will launch its IPO next Tuesday and fix the price Dec. 13. Trading will start Dec. 17.

In another development, market sources said ZTE Corp., one of the largest mainland phone-equipment makers, will boost the retail share of its planned HK$2.8 billion share sale to 50 percent, from 10 per cent, after the offering was 100 times oversubscribed. The remainder would go to institutions. The institutional part of the sale was 11 times oversubscribed, market sources said.

Source: Shenzhen Daily-Agencies