Sept. 24 (Bloomberg) -- China Shenhua Energy Co. rose to a record in Hong Kong trading after the coal supplier said it may raise as much as 66.6 billion yuan ($8.9 billion) in the world's biggest share sale this year.

China's largest coal producer advanced 6.6 percent to a record HK$46.15 by the Hong Kong market's close. Shenhua will sell as many as 1.8 billion yuan-denominated shares in Shanghai for between 34.99 yuan and 36.99 yuan each, it said in a statement to the Hong Kong stock exchange late yesterday.

The last six companies to hold mainland initial public offerings have jumped an average 250 percent on their first day of trade. Those gains have prompted investors to speculate that Shenhua will surge in China, increasing the attractiveness of its Hong Kong stock.

``It's very likely that Shenhua shares will jump on their Shanghai debut,'' said Yan Shi, a Shanghai-based analyst with Core Pacific-Yamaichi International Ltd. ``Coal is a very hot sector and China's coal prices recently have been supporting Shenhua's performance.''

China's thermal coal prices rose as much as 2.2 percent in August from the previous month, the National Development and Reform Commission said Sept. 20. Prices rose as much as 10 yuan to between 460 yuan and 467 yuan a ton at the end of last month at Qinhuangdao, China's largest coal port, the commission said.

Bank of Beijing

Bank of Beijing Co. closed 81 percent higher on Sept. 19 after its first day of trading in Shanghai. Guangzhou Zhiguang Electric Co. increased more than threefold on the same day in Shenzhen. Shenzhen Batian Ecological Technique Co. almost tripled on its Sept. 19 debut in the southern Chinese city.

Selling shares in Shanghai will enable the coal producer to gain from the best-performing stock market this year, raising funds for the expansion of mines, power production, railroads and harbors, and for acquisitions from its parent. China's benchmark CSI 300 Index has more than doubled since Jan. 1.

The transaction may top that of VTB Group, Russia's second- biggest bank, which raised $8 billion in May. Beijing-based Shenhua's shares have more than doubled this year, outpacing the 31 percent gain in the benchmark Hang Seng index and making it the third-best performer this year among the 40 members of the MSCI AC Asia Pacific Energy Index.

Shenhua will use 16.7 billion yuan of the funds raised in Shanghai to invest in 19 coal, power and transportation projects, according to a prospectus published Sept. 13. It will allocate 16 billion yuan for working capital and use the rest for other projects and to buy coal and power assets from its parent.

Expanding Output

The company will spend about 27 billion yuan by the end of 2009 to expand coal production, Chairman Chen Biting said last month. Shenhua has a target of producing 200 million tons of coal a year by the end of the decade and aims to have power output capacity of 20,000 megawatts by then, he said.

First-half profit surged 20 percent to 10.3 billion yuan, Shenhua said Aug. 19, because of increased energy demand in the world's largest consumer of coal. China uses the fuel to produce almost 80 percent of its electricity.

Coal sales at Shenhua, which has reserves second only to Peabody Energy Corp., the world's biggest publicly traded coal producer, climbed 21 percent to 97.8 million tons in the first six months. Production rose 15 percent to 76.6 million tons while power generation jumped 56 percent to 36 million megawatt- hours, accounting for 29 percent of sales.

China International Capital Corp., which is 34 percent owned by Morgan Stanley, and China Galaxy Securities Co. are managing the sale.

To contact the reporters on this story: Ying Lou in Hong Kong at ylou1@bloomberg.net.

Last Updated: September 24, 2007 06:13 EDT