Lifan looking for cash, might go for IPO on Shanghai stock exchange

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Lifan, despite being quite possibly the worlds biggest motorbike manufacturer, only produces on model of car – it looks great, but the Lifan Autos range definitely needs expanding if they are to do well in mainland China before pushing their cars overseas. China Car Times cant even think of seeing a single Lifan on Chinese roads.

CHONGQING Lifan Holdings, a Chinese motorcycle maker that began building cars last year, may sell a stake of as much as 25 percent in a Shanghai initial share sale to fund overseas expansion plans, Bloomberg news said.

“We are aiming to proceed with the IPO by end of this year to fund our car business,” President Yin Mingshan said in a June 9 interview in Beijing. The company plans to sell shares at a valuation of at least 20 times earnings, he added.

Lifan started making compact cars in 2006 with a model named the 520. The company plans to raise 4.5 billion yuan (US$590 million) by 2015 through share sales, bank loans and commercial bills to fund eight overseas plants. It also aims to boost its sales of cars, buses and trucks 12-fold in the period to 600,000 from about 50,000 last year.

“Lifan needs capital to help strengthen competitiveness,” said Song Bingshen, a Beijing-based China Securities Co. analyst.

About 65 percent of the funds raised from the share sale will be used to fund automobile manufacturing, Yin said. He declined to name the managers of the offering.

The company aims to generate 60 percent of profit next year from making vehicles compared with an expected 40 percent this year. The remainder this year will come from motorcycle-related sales.

Lifan is selling shares in Shanghai rather than its previous plan to list in Hong Kong as the Chinese government is encouraging local equity offerings and because of the booming mainland stockmarkets, Yin said.

`Regulators are granting approvals for mainland companies’ Hong Kong IPOs at a slower pace nowadays as they try to encourage us to seek mainland listings,” he said. “The mainland stock market is soaring and a lot of companies that were planning overseas share sales are coming back.”

Chinese companies may raise a record 280 billion yuan in A share sales this year, almost double last year’s tally, according to Ernst & Young LLP.