Lafarge, the world's largest cement maker, and Shui On Construction and Materials Ltd are set to spinoff their cement joint venture, aiming to raise $500 million-$600 million from a Hong Kong initial public offering in 2010, sources close to the matter said.

The IPO will join a long line-up of listing candidates hoping to raise money from a revival in Asian stock markets.

Shares in Shui On Construction were up 6.21 percent at HK$12.32 at 0427 GMT.

The company plans to start preparation work in January, and expects to list in second to third quarter of 2010, one of the sources said.

Regarding our cement business, we are considering various financing options to ensure the future development of the business, said a Shui On Construction spokeswoman, declining to comment specifically on the company's plans.

Lafarge Shui On Cement, in which Shui On Construction has a 45 percent stake, was formed in 2005. The cement maker is focusing on projects in southwest China, including Chongqing, Guizhou, Sichuan and Yunnan.

The joint venture contributed a HK$168 million profit to Shui On Construction in the first half of 2009, a 62 percent increase on the same period last year, as a result of sales volume and price increases and lower production costs.

At the end of June 2009, Lafarge Shui On Cement had a total annual production capacity of 24 million tonnes.

Total sales volume increased to about 11 million tonnes in the first half of 2009, compared with 8.5 million tonnes for the same period last year, which was negatively affected by the Sichuan earthquake in May 2008.

JP Morgan, HSBC and Standard Chartered are handling the deal.


(Reporting by Kennix Chim and Michael Flaherty; Editing by Chris Lewis)