AAC Acoustic Technologies Holdings, one of the world's leading makers of acoustic components, has set the indicated price range for its initial public offering at HK$2.38 to HK$2.82 a share, to raise as much as HK$880 million, market sources said.

The Shenzhen-based company is offering 25 percent of its enlarged capital, or 311.9 million shares, with 274.5 million new shares and 37.4 million old shares, and the deal will raise HK$742 million to HK$880 million. The price range represents 12.6 to 14.9 times the company's 2005 forecast earnings, and about 9.7 to 11.5 times its 2006 forecast earnings.

AAC Acoustic and its sole book runner, Credit Suisse First Boston, can opt to sell 46.8 million old shares or 15 percent more, pumping the deal's size to up to HK$1.01 billion.

About HK$500 million of the funds raised from the offering will be used to expand production facilities, HK$100 million for research and development, and the remainder as working capital, sources said.

Founded in 1993, AAC has its production base in Shenzhen, specializing in the design and manufacture of acoustic components.

The company develops tailor-made products for mobile phone handset makers such as Motorola and Sony Ericsson, as well as other computer and car manufacturers. It posted a net profit of 138.5 million yuan (HK$130.2 million) in 2003 and 200 million yuan last year.

The deal came as the Hang Seng Index hit a 4 ½ -year high of 14,620.

``So far the response from fund managers has been quite good,'' a source said.

AAC kicked off its management roadshow in Singapore Thursday and plans to hold an investor luncheon in Hong Kong for institutional investors Monday. The public offering of the retail tranche will begin on July 28 and end on August 2. The shares are expected to start trading on August 9.carol.chan1@singtaonewscorp.com