Zhongsheng Group Holdings Ltd., a big distributor of Volkswagen AG’s Porsches and Audis and Daimler AG’s Mercedes-Benz cars in China, is raising as much as HK$5.6 billion ($722 million) by issuing shares and selling convertible bonds to Jardine Strategic Holdings Ltd.
Zhongsheng will issue 238.6 million shares at HK$10.80 each and sell convertible bonds worth HK$3.09 billion, as the money raised would help the company expand its dealership network to capitalize on increasing car sales. Sales in China’s auto market, the world’s largest, are forecast to expand to as many as 24.18 million vehicles this year, a 10 percent gain, according to the state-backed China Association of Automobile Manufacturers.
Jardine, a member of the Jardine Matheson Group, retails Mercedes-Benz and Citroen vehicles in Singapore and Malaysia through its Singapore-listed Jardine Cycle & Carriage Ltd. arm. It also has businesses in hotels, property development, and a retail arm with supermarkets and convenience stores.
Zhongsheng reported net income of 489 million yuan ($81 million) in the first half of last year and had 163 dealerships in China, according to its 2013 interim report.