Guangzhou Baiyun International Airport Co shares rose after the operator of China's third-busiest airfield said it plans to sell stock to its parent, boosting expectations that an overseas investor may buy a stake.

The company will issue no more than 150 million shares to fund the 2.03 billion yuan (US$260 million) purchase of a runway and other assets from its parent, it said in a statement to the Shanghai Stock Exchange on December 6. Guangdong Airport Management Corp, the company's parent, will buy more than 90 percent of the shares issued in the private placement, it said.

Guangzhou Baiyun is in talks with Airport Authority Hong Kong, Fraport AG, the owner of Frankfurt Airport, and other companies about cooperation and possible investment, according to Bloomberg News. China, the world's second-largest aviation market, plans to spend 140 billion yuan by 2010 expanding its airports.

"The share issue makes it easier for the company to attract overseas investors as it will have improved assets," said Ma Xiaoli, an analyst at Citic Securities Co in Shanghai. "The private placement will increase the parent's stake and enable it to sell shares."

The company's stock has gained 16 percent this year, underperforming an 82 percent rise in the Shanghai A-share Stock Price Index.

The new shares will be valued at a minimum of 7.09 yuan each, the average price over the last 20 trading days, the airport operator said.

Guangzhou Baiyun in the southern province of Guangdong may handle 27 million passengers this year, an increase of 14 percent from last year, Vice Chairman Liu Zijing said earlier. Passenger numbers may rise to 30 million in 2007.

China Southern Airlines Co, the nation's largest carrier, is based at Guangzhou Baiyun. FedEx Corp, America's second-largest package-shipping company, is building a US$150 million hub there.