Goldman Sachs Group Inc, HSBC Holdings Plc and UBS AG are making presentations in Beijing for the right to arrange a US$500 million first-time share sale for Air China (中國航空), the nation's biggest international carrier, bankers said.
Merrill Lynch & Co pitched to China National Aviation Holding Co yesterday to sell 25 percent of Air China, its biggest unit, said the bankers involved in the presentations, which end today. The airline plans to sell its shares next year, after reorganizing, said the bankers, who asked not to be identified.
"It's on the schedule for the first half of next year," said Marco Mak, head of research at Tai Fook Securities Group Ltd in Hong Kong. "It's one of the major airline groups in China so there will be a lot of interest from investors." Goldman, HSBC and rivals want to strengthen their foothold in China, which sold US$60 billion of state assets in the past 10 years and could sell as much again in the next decade.
The Beijing-based carrier said this month it will be profitable next year, recovering from a 2 billion yuan (US$241 million) first-half loss as air travel resumed after the outbreak of SARS abated.
China last year ordered the nine airlines under the control of the Civil Aviation Administration of China to merge into three bigger groups to reduce excess capacity and improve earnings.
Air China, which merged with China Southwest Airlines Co, Zhejiang Airlines Co and China National Aviation Corp, also a unit of China National Aviation Holding, revived plans for a possible share sale in Hong Kong about three weeks ago, inviting the four banks to Beijing.
China is selling state assets as part of its entry into the World Trade Organization. The nation is opening up to foreign competition and reducing its involvement in industry. Chinese companies sold US$5 billion of stock overseas in the year to date, led by China Life Insurance Co's (中國人壽) US$3 billion initial public sale.
The carrier had net income of 600 million yuan in October, allowing it to break even for the first 10 months of the year, said Fan Cheng, head of its corporate planning division, in a telephone interview.
The airline two years ago shortlisted HSBC, Merrill and UBS out of an original group of nine banks pitching to help reorganize the airline, Fan said.
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