Precision engineering company The HPL Group is to float on PLUS and is aiming to raise £1.7m.
The new money will be used primarily to build a new 1800sq m factory in the city of Xian, which is the heart of China’s aerospace industry. However, the Coventry-based company says it will also maintain its Midlands HQ.
The 80-strong business, which produces aeroplane parts for companies such as Rolls Royce and Smiths Aerospace, is expected to be valued at £5m.
China is seen as a big market by HPL which has managed to forge a way through the People’s Republic’s Byzantine trade restrictions and license agreements in order to gain a crucial position in the market.
HPL has taken advantage of a law passed in 2000 which allows ‘Wholly Foreign Owned Enterprises’ (WFOEs) to set up on Chinese soil.
It has made agreements with a number of large WFOEs in the country which has helped them to overcome China’s trade barriers and is now legally able to do business.
In a statement the company cites the communist state as an area of tremendous growth for the sector.
“China is expected to be the most significant region for the aviation industry over the next 20 years,” HPL says.
“With annual traffic growth expected to average around 8%, the country is likely to lead the rest of the world in volumes of aircraft and engine purchases.
“The demand for nearly 3,000 aircraft from China is expected to drive a total market for 6,500 engines, valued at US$65 billion, through to 2026.”
HPL is being advised by Orange Corporate Finance on its float on the PLUS market.
© Crimson Business Ltd. 2007
