China Brokerage Seeks to Raise $2.12 Billion in IPO

(Beijing) — China’s third-largest brokerage by assets plans to raise HK$16.47 billion ($2.12 billion) via an initial public offering (IPO) on the Hong Kong Stock Exchange.

Guotai Junan Securities Co. Ltd. said on Monday that it plans to issue 1.04 billion shares at HK$15.84 per share on the Hong Kong bourse. The IPO would be the largest since the $7.63 billion IPO of Postal Savings Bank of China in September.

While most companies seeking an IPO offer an indicative price range for their shares, Guotai Junan offered a fixed price, which was decided according to the closing prices of the top five Chinese brokerages listed in Hong Kong last week, company Chairman Yang Dehong said.

The subscription period for the offering started Tuesday and ends Thursday. The company hopes to begin trading on April 11.

Six cornerstone investors — including British private-equity firm Apax’s subsidiary, Shanghai-based Bank of Communications’ investment arm and Da Cheng Fund’s Hong Kong unit — have pledged to acquire 294 million shares together, according to a prospectus released on Tuesday.

The funds raised by Guotai Junan will be used to develop the brokerage’s financial institution business, improve services for individual clients, bolster investment management and explore the global market.

Wang Song, the company’s vice chairman, said the IPO will help the securities company meet its domestic clients’ needs to invest overseas. Through the IPO, the company aims to make a further foray into the global market and strengthen its existing international business, Wang added.

Guotai Junan, which is already listed on the Shanghai bourse, reported a net profit of 15.7 billion yuan ($2.29 billion) in 2015 and 9.8 billion yuan in 2016. Its total assets reached 411.7 billion yuan by the end of last year.

The brokerage firm first revealed its plan to go public in Hong Kong earlier this year.

A number of Chinese brokerage firms have gone public by listing in Hong Kong in recent years as equity trading volume on the Chinese mainland has remained sluggish since the stock market meltdown in 2015. In August, Everbright Securities, controlled by state-owned financial conglomerate China Everbright Group, raised HK$8.6 billion via a Hong Kong IPO. China Merchants Securities Co., the investment banking and brokerage arm of state-owned conglomerate China Merchants Group, also went public in September, seeking to raise $1.47 billion.

Contact reporter Chen Na (nachen@caixin.com)