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Last Updated: Monday, 29 November, 2004, 06:38 GMT
Chinese auto firm looks overseas
Chinese car factory
Shanghai Automotive employs more than 60,000 workers
Shanghai Automotive Industry Corporation, China's largest carmaker, is restructuring its assets as a prelude to listing its shares overseas.

The company, which is negotiating an investment in Britain's MG Rover, is consolidating all its key assets into a new holding company, state media said.

Experts believe the move is the first step towards the firm selling shares abroad, most likely in Hong Kong.

Shanghai-listed SAIC wants to become a top six global automaker by 2010.

First step

In a statement to the Shanghai Stock Exchange, the firm said it was creating a new holding company -Shanghai Automotive Group -to house all its car manufacturing interests.

We are now devising plans related to future fund-raising and development
Xue Hao, Shanghai Automotive Industry Corporation

These will include the firm's joint venture businesses with Volkswagen and General Motors as well as the 49% stake that SAIC is buying in South Korean carmaker Ssangyong Motor Corporation.

The firm is thought to be weighing up an overseas share listing in 2005, which could raise up to $2bn.

Although it is most likely to list in Hong Kong, the South China Morning Post said the firm was also pondering a listing in New York.

"We are now devising plans related to future fund-raising and development," Xue Hao, an SAIC spokesman, told Reuters.

"You can say that our establishing this shareholding company is a step" towards preparing for a public flotation, he added.

Rover talks

The move would require approval by the Chinese government and by financial regulators.

SAIC said in its stock market statement that it employed more than 62,000 workers and had net assets of 33.1bn yuan ($4bn) at the end of 2003.

The firm said that its net profits had risen 25% to 1.8bn yuan ($212m) in the first nine months of the year.

SAIC is currently in negotiations with MG Rover about investing in the struggling car maker.

According to media reports, SAIC is considering pumping about 1bn in a joint venture business, to be based in China.

Rover said last week that SAIC would not be investing in its UK manufacturing business as part of the deal.

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