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October 27, 2009

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Retailer's IPO set to boost Yu's wealth

CHINESE scholar and author Yu Qiuyu will possibly see his wealth swell by as much as 150 million yuan (US$22 million) on account of his 1.5-percent stake in a local retailer that is set to list on the Shenzhen Stock Exchange.

Shanghai Xujiahui Commercial Co yesterday received approval for its initial public offering from the China Securities Regulatory Commission, the regulator notified in a statement yesterday.

The retailer plans to raise 906 million yuan by issuing no more than 70 million A shares at 12.95 yuan each, or equivalent to 16.84 percent of the enlarged capital, on the Small and Medium Enterprise Board in Shenzhen.

Yu bought his stake, equivalent to 5.19 million shares, for 2.41 million yuan in 2001, and he is ranked the 10th-biggest shareholder in the retailer. The cost of his stake is about 0.46 yuan per share.

Shanghai Xujiahui Center (Group) Co is the retailer's biggest shareholder.

Yu's wealth will jump by more than 27 times to 67.21 million yuan based on the issue price. Based on the average jump of 130 percent for retailers that debut on the SME board, shares of Xujiahui Commercial are likely to rise to 30 yuan, meaning Yu's wealth will jump more than 60 times to as much as 150 million yuan, analysts said.

But he has to wait a year after the listing to cash in his shares based on the exchange's guidelines.

Xujiahui Commercial owns Huijin Department Store, Huilian Plaza and Shanghai No. 6 Department Store in the prime Xujiahui commercial area. The three stores take a combined 43.37 percent share of the retail market in the area.

Part of the proceeds from the IPO will be used to build the Hongqiao branch of the Huijin store.


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