Daimler-backed BAIC Motor set to raise $1.42 bln in HK IPO -sources

* IPO set to be priced at HK$8.90/share, near middle or range * Hong Kong stock market debut set for Dec 19 * BAIC Motor to use IPO proceeds to boost output, develop vehicles (Adds use of IPO proceeds, underwriters) HONG KONG, Dec 12 (Reuters) - Chinese automaker BAIC Motor Corp Ltd , part-owned by Germany's Daimler AG , is set to raise about $1.42 billion in an initial public offering (IPO) in Hong Kong, people with knowledge of the deal said on Friday. The automaker plans to price 1.24 billion shares at HK$8.90 each, said the people, who declined to be named because the pricing decision has not yet been made public. The price is not final and may change, the people said. The price would be just above the mid-point of a HK$7.60 to HK$9.80 marketing range, putting the total value of the offer at HK$11.03 billion ($1.42 billion). BAIC Motor did not immediately respond to an emailed request for comment. The stock will begin trading on the Hong Kong Stock Exchange on Dec. 19. The company plans to use 60 percent of the IPO proceeds to help fund the expansion of its vehicle production line and an engine factory, with another 15 percent set aside to pay down bank loans and 10 percent to develop new vehicles. BAIC Motor is the passenger car unit of state-owned Beijing Automotive Group (BAIC). Last year, Daimler sealed a deal to buy a 12 percent stake in BAIC Motor to boost its China presence ahead of the long-expected IPO. Daimler's Mercedes-Benz brand is currently outsold in China by German rivals BMW and Volkswagen's Audi. The IPO could also help BAIC Group better compete with larger local rivals SAIC Motor, Dongfeng Group and FAW Group as the government tries to consolidate the auto industry. Citic Securities, Deutsche Bank, HSBC and UBS were hired as joint sponsors for the IPO and will earn HK$3.2 million for their sponsor roles, according to the automaker's IPO prospectus. China Merchants Securities, CLSA and Morgan Stanley also acted as joint bookrunners. The group of banks stands to jointly earn $14.2 million in underwriting commissions from the deal, equivalent to a 1 percent fee, according to the prospectus. ($1 = 7.7525 Hong Kong dollars) (Reporting by Fiona Lau of IFR and Elzio Barreto; Editing by Miral Fahmy)