(South China Morning Post)
Updated: 2007-08-13 16:01

Shenzhen Airlines, the largest privately owned airline in the mainland, plans to raise up to US$200 million from selling a 20 per cent stake to investors and then go on to raise at least US$1 billion from an initial public offering as early as next year, people familiar with the company said.

A fund run by Deutsche Bank, Germany's largest bank, and hedge funds including Marathon and Och-Ziff were among the interested parties that began discussing a sale earlier this year, sources said.

Zhao Xiang became the chairman of Shenzhen Airlines after he bought a 55 per cent stake from Guangdong Development Bank through an auction sale process in late 2005. He owns the stake through Shenzhen Huirun Investment, a holding company of which he is the chairman. Bright Oceans Corp picked up a 10 per cent stake at the same time.

The two companies paid 2.72 billion yuan for the 65 per cent stake, according to a SinoCast report at the time.

Other Shenzhen Airlines shareholders include international carrier Air China, which holds a 25 per cent stake, and Total Logistics (Shenzhen) with a 10 per cent stake.

Shenzhen Airlines plans to buy 28 A320 aircraft from European aircraft maker Airbus, the France-based company said in July.

Shenzhen Airlines operates more than 80 domestic and international air routes.

The company in December announced it was forming a US$65 million joint venture with US-based Mesa Air Group in the mainland's first foreign joint venture in the airline sector. The venture was to have begun operation this year.

The companies said they would start with 20 aircraft and acquire 20 more a year until they have 200.

Shenzhen Airlines will hold 51 per cent of the venture.