ITS to make Hong Kong offering

Intelligent transportation systems have huge market potential in China. [Hai Tao / for China Daily]

BEIJING - Intelligent transportation system provider China ITS (Holdings) Co is making a Hong Kong initial public offering (IPO) from which it hopes to raise HK$923.7 million ($119 million), the company said in a share sale statement e-mailed to fund managers on Monday.

Beijing-based ITS is going to sell 236.84 million shares, 15 percent of its total stake, at an initial price of between HK$2.85 and HK$3.90 each, said the statement. They are expected to start trading on the Hong Kong stock exchange on July 15.

Funds raised will be used for future acquisitions, operational capital expansion and research and development, said the statement.

About 84 percent of the shares for sale will be newly issued, with the rest sold by ITS' current shareholders including CCB International (a wholly owned subsidiary of China Construction Bank in Hong Kong) and Baring Private Equity Asia, according to ITS.

The company's other shareholders include Intel Capital, Temasek Holdings Pte, GE Capital, Investor AB, CMS Capital (HK) Co Ltd, NWS Holdings Ltd and Mizuho Securities.

Two of its pre-IPO investors will buy more shares in the sale as corporate investors who agree not to sell their holdings for six months, the e-mail said.

Singapore's state-owned Temasek will buy $11.5 million worth of shares in the IPO and Hong Kong-based NWS Holdings will buy another $5 million, said the company.

Intelligent transportation systems are an integrated service package using information and communications technologies to manage vehicles, loads and routes.

"Intelligent transportation system has huge potential market in China, as it is a revolution in modern transportation that helps solve infrastructure challenges including serious congestion, road safety issues and environmental concerns in China," said Yang Xiaoguang, director of the Department of Transportation Engineering and ITS Research Center at Shanghai's Tongji University. "Although it's still an emerging market, the future potential is great."

Liang Mingshu, CFO of ITS, said earlier this month that the company currently provides intelligent system solutions including monitoring, toll charging and communication, and power supply in the highway, railway and subway sectors.

ITS' revenue jumped 64.4 percent year-on-year on average between 2005 and 2009.

According to Bohai Securities, in 2009, China's intelligent transportation system market reached 16.3 billion yuan ($2.4 billion), up 19.4 percent from the previous year.

Beijing-based Consulting firm CCW Research said investment in intelligent transportation systems in China will reach 80 billion yuan over the next decade.

CCW predicted in the next three years that China's intelligent transportation system market will grow by more than 20 percent year-on-year.