Shanghai Automotive Industry Corp (SAIC), China's biggest passenger carmaker, officially launched a shareholding company to pave the way for its overseas listings on Thursday.

The shareholding company, named Shanghai Automotive Group Company Limited, has a registered capital of 25.7 billion yuan (US$3.1 billion), said Zhu Xiangju, a spokeswoman for SAIC.

Its net assets amount to 39.6 billion yuan (US$4.8 billion).

The State-run SAIC's assets in its Shanghai-listed affiliate Shanghai Automotive Co Ltd, and its two car joint ventures with General Motors (GM) and Volkswagen, have been put into the new company.

Chen Hong, former president of SAIC's venture with GM in Shanghai, will take the helm of Shanghai Automotive Group Co Ltd.

It is reported that the new company plans to launch initial public offerings in Hong Kong and New York during the first half of next year to raise up to US$6 billion.

Zhu, however, declined to confirm the report.

"Overseas listings are badly needed for SAIC to raise massive capital to achieve its bold expansion at home and abroad," said Zhang Xin, an analyst with Guotai & Jun'an Securities Co Ltd.

In October, SAIC clinched a deal to buy a 48.9 percent stake in South Korean automaker Ssangyong Motors with US$500 million.

SAIC is in talks with British carmaker MG Rover to pay up to 1 billion pounds (US$1.9 billion) to acquire the company.

SAIC and GM plan to invest more than US$3 billion to more than double their joint ventures' annual production capacity to 1.3 million cars and introduce new models by 2007.

Its joint venture with Volkswagen also plans to increase annual production capacity to 1 million units by 2008.

SAIC, crowned as one of the world's top 500 multinationals this year, aims to increase its annual output to 4 million vehicles and become one of the world's six biggest automakers by 2020.

Its sales this year will exceed 800,000 vehicles, up from 782,000 units last year.

SAIC reported US$11.72 billion and US$1 billion in revenues and profits respectively last year.

Many other main Chinese automakers are also seeking overseas listings, such as Dongfeng Motor Corp, Chang'an Motor Corp and Beijing Automotive Investment Corp.

Shanghai Automotive Co Ltd closed at 4.92 yuan (US$0.59) per share yesterday, down 1.99 percent.

(China Daily December 31, 2004)