Konka Group Co., Ltd., one of China's largest color TV producers, has succeeded in offering 80 million new A shares in an innovative way that is nearest to the international practice but never been tried in China before.

Unlike previous non-initial public offerings, in which new shares were allocated among prior shareholders at a price usually 40-50 percent lower than the market value, Konka's former shareholders did not participate in the allocation, but could bid on the stock exchange like ordinary investors.

A second difference relates to pricing. Instead of the usual fixed price, the price of Konka's new shares is negotiated between the underwriter and institutional investors, based on the current market value of the Konka A share listed on the Shenzhen Stock Exchange and at a discount of no more than 20 percent.

The price of the these new stocks is offered to general investors on the stock exchange. Based on the bidding, the underwriter decides on the shares for institutional and general investors.

According to the underwriter, China International Capital Corporation, the price of the new offer was finally fixed at 15.50 yuan per share.

Total bids by investors exceeded 16 billion yuan, while valid bids at prices equal to or higher than 15.50 yuan totaled 370 million shares.

According to bidding by institutional and ordinary investors, it was decided that 60 million would be sold to ordinary investors, with the rest going to institutional investors.

Konka raised more than 1.2 billion yuan from the issue, as it had planned.

Industrial analysts here said Konka's success marks a major step by China in regulating its securities market in accordance with international standards and would help achieve a better balance between the interests of issuers and investors.

Sources say Konka's success may lead to a new government policy on non-initial public offers. (Xinhua)