Auto dealer testing the waters on HK initial public offering

HONG KONG: Chinese automobile dealer Zhongsheng Group Holdings Ltd yesterday started testing demand for a Hong Kong initial public offering (IPO) that could raise as much as $1 billion, said three people with knowledge of the planned sale.

The company, based in Dalian, Liaoning province, plans to start taking orders on March 3, said two of the people, who declined to be identified because the information is private. The share sale may fetch $600 million to $1 billion, the three people said.

Zhongsheng is coming to the market as investors have become more selective in buying shares in IPOs. Hong Kong's benchmark Hang Seng Index has fallen 7 percent this year. Four of the six companies that went public in the city in 2010 are trading below their IPO prices, according to data compiled by Bloomberg.