China's ship engine maker Hudong Heavy Machinery Co. said it would raise 12 billion yuan ($1.5 billion) through a private placement in a move seen to help pave the way for a listing of its parent -- the world's third-largest shipbuilder.

Shanghai-based Hudong planned to issue an additional 400 million shares to buy assets including all stakes in ship-builder, Shanghai Waigaoqiao Shipbuilding Co. Ltd. The new shares would be sold to up to 10 major state-owned companies including Baosteel Group Corp, China's top steel maker and parent of Baoshan Iron and Steel Co.

Hudong's expansion will help its parent list its main civilian assets. The parent, China State Shipbuilding Corp. (CSSC), is planning a Hong Kong initial public offering to raise about US$800 million in 2007.

CSSC, which builds naval and civilian ships, is the world's No.3 builder of ocean-going vessels by capacity, behind Hyundai Heavy Industries Co. of South Korea and Japan's Imabari Shipbuilding Co. Ltd., according to shipbrokers Clarkson Plc.

The state-run firm aims to be the world's No.1 shipbuilding group in 2015 by building two shipbuilding bases -- one in Shanghai and another in Guangzhou -- to boost capacity. As part of the plan, the state-run firm aims to raise capital by selling additional shares in mainland-listed units such as Hudong or Jiangnan Heavy Industry to fund the construction of the multi-billion-dollar yards in Shanghai and Guangzhou.

Source:未知