LONDON - SunArt Retail Group Ltd, the Chinese hypermarket operator backed by France's Group Auchan SA, plans to raise as much as HK$8.2 billion ($1.1 billion) in a Hong Kong initial public offering.

The Shanghai-based company, which counts Wal-Mart Stores Inc among its competitors, plans to sell 1.14 billion new shares for HK$5.65 to HK$7.20 each.

About half the stock will go to nine so-called cornerstone investors, including the Government of Singapore Investment Corp and Tiger Global Management LLC, which agreed to invest $40 million each.

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SunArt is pressing ahead with its offering even after a slump in the benchmark Hang Seng Index prompted at least four companies to cancel Hong Kong IPOs this month, according to Bloomberg data.

Casual-wear retailer China Outfitters Holdings Ltd withdrew a proposed offering on Monday, citing market conditions.

The Hang Seng Index is down 7 percent so far in June, on track for its worst monthly performance since January 2010. At the high end of its offering price range, SunArt's shares will be valued at 31.5 times estimated 2011 earnings, according to one of the banks arranging the sale. Hong Kong-listed Wumart Stores Inc and Linhua Supermarket Holdings Ltd, which run hypermarkets, supermarkets and convenience stores in China, trade at 29 times and 20 times projected full-year profit respectively, according to Bloomberg data.

SunArt is the largest hypermarket operator in China and had a 12 percent share of sales last year, according to a research note by Morgan Stanley, which is one of the banks arranging the IPO. That puts it ahead of Wal-Mart, China Resources Enterprise Ltd and Carrefour SA, Morgan Stanley estimated.The retailer plans to use about half of the IPO proceeds to open new outlets in China and 30 percent to repay bank loans, according to a sales document. The company began meeting institutional investors on Tuesday and plans to set a final price on July 7 and start trading on July 15, the document showed.

Bloomberg News