The China Securities Regulatory Commission has approved Lifan's application to launch an initial public offering on the Shanghai stock exchange.

Lifan, which is privately held, will issue as many as 200 million shares to raise 1.5 billion yuan ($222 million) before the end of this year. According to Lifan's prospectus, the company will use 850 million yuan to build a new assembly plant to produce up to 50,000 passenger cars a year.

The automaker will spend an additional 280 million yuan on a new plant that will build up to 150,000 engines annually for passenger cars and agricultural equipment. The rest of the funds will be used to expand motorcycle production.

In the first nine months of this year, Lifan's worldwide car sales jumped 36 percent 34,600 units. The company can assemble up to 50,000 passenger vehicles a year. Models include the 320 micro car, the 520 subcompact and the 620 compact sedan.

Lifan, which is headquartered in the southwest China city of Chongqing, builds heavy trucks, buses, cars, motorcycles and lawn mowers. It has an auto assembly plant in Chongqing, and it also builds cars in Russia, Vietnam and Ethiopia using imported kits.

Measured by revenue, Lifan is China's 19th largest vehicle producer last year, with sales of 13.3 billion yuan.