2010-06-25 10:16

SAIC Motor Corp, China's largest domestic carmaker, aims to raise as much as 10 billion yuan ($1.47 billion) in a private share placement to expand in the world's biggest auto market by developing own-brand vehicles.

The partner of General Motors Co and Volkswagen AG will sell as many as 900 million yuan-denominated A shares, and its parent company, Shanghai Automotive Industry Corp, agreed to buy at least 10 percent of the shares for 1 billion yuan or more, the automaker said in a statement late yesterday to the Shanghai stock exchange. SAIC shares will resume trading today after being halted since June 18, the statement said.

SAIC plans to develop new own-brand vehicles and expand a technology center to compete against foreign rivals including Ford Motor Coand Toyota Motor Corp in China, which surpassed the US in auto sales last year. The government is encouraging domestic automakers to develop their own brands and alternative- energy technology.

While most of SAIC's vehicles are made with GM and Volkswagen, the Shanghai-based company aims to sell 180,000 of its own-brand vehicles this year, President Chen Hong said in March.

SAIC owns the British Rover and MG sports-car brands and renamed Rover cars in China as Roewe after taking over the design rights in 2005. It plans to start making MG-brand cars at its plant in the UK by the end of this year, spokeswoman Zhu Xiangjun said in January.

The automaker's shares closed at 12.05 yuan in Shanghai on June 18. They have dropped 40 percent this year, compared with a 22 percent decline in the benchmark Shanghai Composite Index.

Sales Target

SAIC aims to sell more than 3 million vehicles this year and boost revenue to 245 billion yuan from 140 billion yuan in 2009, according to a filing to the Shanghai stock exchange on April 1.

The company's sales rose 26 percent from a year earlier to 289,239 vehicles in May, the automaker said on June 7. Demand in China for automobiles, including the Buick Excelle compact sedans SAIC makes with GM and Sunshine minivans produced by its SAIC-GM-Wuling unit, helped the Chinese automaker boost first- quarter profit more than fourfold to 2.88 billion yuan.

"Fundraising is of great importance to SAIC right now as it needs to develop next-generation models for its Roewe and MG brands," John Zeng, a Shanghai-based analyst with IHS Global Insight, said in a phone interview on June 19.