Xi'an Aircraft International Corp said today it had gained regulatory approval to issue shares to buy assets from its parent, taking a lead among domestic military industrial firms to conduct group listings.

The green light came just two weeks after China unveiled new guidelines to encourage military-related companies to go public as a whole group and attract investments from listed firms and foreigners.

Xi'an Aircraft said it had received the approval from the China Securities Regulatory Commission to conduct a private placement with as many as 10 investors, according to an exchange filing.

The Shenzhen-listed aircraft maker had proposed to collect up to 6.6 billion yuan (US$890 million) selling shares at no lower than 9.18 yuan apiece. Its parent Xi'an Aircraft Industry (Group) Co will take at least 55 percent of the offering.

Xi'an Aircraft Industry (Group) has planned to inject assets of civil aircraft manufacturing, research and development as well as services into the listed unit in exchange for the shares. Part of its military aircraft assembly lines and component part assets will also be included.

However, some under-trial projects involving high risk and initial investment won't be injected into the public arm at the current stage, Xi'an Aircraft said in an earlier statement, without giving details.

"The group listing is positive to the company's growth as most of the parent's quality assets will be injected,'' Wu Yucun, a United Securities Co analyst, said in a note. ``We expect military industrial enterprises will strive to seek consolidation and group listings through 2009.''

China early this month issued guidelines to prompt military industrial companies to revamp and pursue public stock offerings to raise capital for expansion as the central government encourages a shift from military to civilian production.

As part of the initiatives, government-owned publicly traded firms are allowed to acquire all or some of the assets held by military industrial enterprises to help them revamp for public listings.

Guidelines also allow foreign companies to invest in revamped military enterprises in which the government is the biggest shareholder, but the combined state holding is lower than 50 percent. These military companies can seek stock listings at home or overseas.

(Shanghai Daily November 26, 2007)