Hong Kong Airport, Asia's second-busiest, will sign a deal next week to buy more than 30 percent of China's tenth-largest airport at Hangzhou for over USD$120 million, an executive with the mainland firm said on Friday.

The Airport Authority of Hong Kong, which is planning to float shares in 2005 or 2006, will sign a deal in Hangzhou on April 15 to kick off the biggest acquisition by an overseas firm ever of a mainland airport, he added.

Hong Kong's airport would pay at least 1 billion yuan (USD$120.8 million) to become the second-largest shareholder in Hangzhou's Xiaoshan International Airport, the executive said.

"The Hong Kong airport authority is going to spend somewhere between one and two billion yuan," the executive said.

"We're now in the process of re-assessing Xiaoshan's net worth and so on, and even taking another look at Hangzhou's property prices. The price tag might rise after that."

Hangzhou's airport is the main hub for flights into the prosperous eastern province of Zhejiang, which adjoins Shanghai and is the country's cradle of modern private enterprise. It officially maintains net assets of 2.2 billion yuan (USD$265.8 million).

Since its establishment in 2001, passenger volume has increased by 29 percent annually. In 2004, the airport handled 6.34 million passengers and 160,000 tonnes of cargo, earning a net profit of 67 million yuan.

Hong Kong's airport is keen to diversify beyond its home turf, saying it is also interested in the Pearl River Delta region of southern China.

The city's airport authority has said it expects passengers in the 2004/05 financial year to hit 36 million from 27.7 million in the last fiscal year.

Hong Kong Airport made a net profit of HKD$386 million (USD$49.50 million) in the 2003/04 financial year ended March 31, compared with HKD$502 million in the year-earlier period.