China Mobile, the world's largest mobile phone operator, plans to raise more than $6 billion in a stock offer in Shanghai as early as next month that would be China's largest ever, sources familiar with the situation said on Monday.
The final fund-raising figure will depend on market conditions and regulatory approvals, the sources said, but it is certain to exceed China's previous record, 46.6 billion yuan ($6.1 billion), raised last year by Industrial & Commercial Bank of China, the country's biggest lender.
The funds will be used for rapid expansion of its network and technological development, they added.
Beijing has been encouraging its leading domestic companies to list shares at home, aiming to develop China's capital markets and give increasingly stock-hungry local investors more shares to trade.
China Mobile hired KPMG to audit its proposed Shanghai listing late last year. An auditing report has been completed and submitted in a package of listing documents to regulators in Beijing for consideration, the sources said.
"All the necessary documents are well prepared now. The timing of the listing is up to Beijing, but the company definitely aims for as soon as July," said one of the sources.
China Mobile has also hired Goldman Sachs Gaohua Securities to advise on the Shanghai listing, the sources said.
A Hong Kong-based China Mobile spokeswoman declined to comment on the offering's timing or fund-raising targets.
"We don't have a timeframe for an A-share listing. But that's always been the company's intention," she said.
Hong Kong's Chinese-language Apple Daily newspaper, citing an unnamed mainland Chinese source, said the deal could raise as much as 80 billion yuan.
Red Chips
Hong Kong-listed shares of China Mobile hit an all-time high of HK$80.40 during Monday's trade before closing at HK$80.35, up 6 percent and a record closing high, buoyed by a strong market rally and hopes for its Shanghai listing. Beijing has selected China Mobile as the first of several major Hong Kong-listed Chinese "red chips" that are expected to list in Shanghai by the end of this year, the sources said.
Top regulators in Beijing have said they were drafting new rules to allow red chips to float shares on mainland bourses.
Analysts noted that the Hong Kong and Shanghai markets differ in what they offer listed firms, in terms of liquidity and the type of investors they attract.
"The two markets are driven by different factors," said Khiem Do, head of Asia Multi-assets at Baring Asset Management in Hong Kong.
Three other major red chips, PetroChina, China Telecom and Shenhua Energy, are expected to list in Shanghai before the end of this year, after China Mobile, the sources said.
Beijing is also considering, as part of its long-term economic strategy, establishing a special board within the Shanghai Stock Exchange to attract listings by China-focused overseas companies such as HSBC Holdings and Bank of East Asia, the sources said.
Officials at the Shanghai bourse declined to comment.
"China Mobile is a pilot and if its listing goes successfully, you will see many others like China Mobile listing domestically," another of the sources said.
The source added that Beijing was expected to speed up its IPO approval process to meet increasing investor demand for shares amid ample market liquidity.