(Updates with shareholders in sixth paragraph.)
Dec. 31 (Bloomberg) -- Inner Mongolian Baotou Steel Union Co., a Chinese steelmaker, will raise as much as 29.8 billion yuan ($4.9 billion) in a private share placement to buy assets from its parent and replenish working capital. The stock jumped.
The board approved a plan to sell as many as 8.26 billion shares in Shanghai at 3.61 yuan apiece, the Baotou, Inner Mongolia-based company said today in a statement. That compares to the 3.92 yuan the stock last traded at on Oct. 31.
The shares will be issued to seven investors, including state-owned Baogang Group, the company’s parent, Baotou Steel said. Guohua Life Insurance Co. and Huaan Asset Management (Hong Kong) Ltd. will also buy shares in the placement, it said.
China said last month it will actively develop diversified ownership of state-owned companies. Pension funds, insurance funds and private equity funds are encouraged to invest in state-owned entities, according to a statement this month from the State-Owned Assets Supervision and Administration Commission.
Baotou Steel advanced 10 percent, the daily limit, to 4.31 yuan in Shanghai trading, giving it a market value of 34.5 billion yuan. The shares were halted from trading last month.
Baogang, also known as Baotou Iron and Steel Group Co., controls 51 percent of Baotou Steel, according to data compiled by Bloomberg.
The assets acquired from the parent will reduce connected transactions and improve its self-sufficiency in raw materials, Baotou Steel said today in a separate statement.
--Editors: Madelene Pearson, Keith Gosman