Plantation and palm oil processor Wilmar International is expected to spin off its China food operation, raising up to HK$27.3 billion ($3.5 billion) in a flotation of shares in Hong Kong in October, the Hong Kong Economic Times reported on Tuesday.

The Singapore-listed consumer products maker and distributor is set to sell 7.33 billion shares of Wilmar China, its food processing business in China, at an issue price representing a prospective 16 to 20 times price-to-earnings multiples based on 2009 earnings estimates, the newspaper said citing a preliminary listing document.

Wilmar China, which produces food, bottled water, oil and noodles, aims to use about 40 percent of the proceeds to expand production capacity, 35 percent for acquisitions, and the remainder to repay debt and as working capital.

The China unit is expected to kick off its roadshow on Oct. 5, and will open for public subscription in Hong Kong on Oct. 12-15. Trading in the shares is scheduled to begin on Oct. 23. BOCI is handling the share sale, the newspaper said.

(US$1=HK$7.75 yuan)

(Reporting by Donny Kwok; Editing by Chris Lewis)