CHINA CNR Corp., the nation’s second-biggest trainmaker, has picked China International Capital Corp., Macquarie Group Ltd. and UBS AG to work on an initial public offering (IPO) in Hong Kong, said sources with knowledge of the matter.

    Shanghai-listed China CNR plans to raise as much as US$1.5 billion in the offering this year, said the sources. The company has yet to file an application to the Hong Kong stock exchange, the sources said.

    China CNR is seeking funds as the government expands the world’s largest high-speed rail network. The Beijing-based company said Jan. 6 it signed contracts worth 28.2 billion yuan (US$4.7 billion) to sell bullet trains to State-owned China Railway Corp.

    Selling stock in Hong Kong allows mainland-listed companies to take advantage of valuations that can be higher than on the mainland. Larger competitor CSR Corp. trades in Hong Kong at 12.1 times estimated 2014 earnings, while its Shanghai shares carry a multiple of 11.8. China CNR trades in Shanghai at 10.2 times projected 2014 earnings.

    China’s State-owned asset regulator approved China CNR’s Hong Kong listing plan in principle, the trainmaker said in a statement Jan. 2, without giving details.

    China Securities News reported in November that China CNR plans to list up to 1.8218 billion H shares, or about 15 percent of its total shares, in Hong Kong.

    (SD-Agencies)