Caixin
Mar 02, 2020 09:30 PM
FINANCE

Finance Giant CICC Pursues Shanghai IPO

A CICC branch. Photo: VCG
A CICC branch. Photo: VCG

Hong Kong-listed China International Capital Corp. Ltd. (CICC), one of the country’s top investment banks and brokerages, is looking to go public in Shanghai to raise funds as the Chinese mainland offers comparatively generous valuations to firms in the industry.

CICC plans to publicly issue up to 458.6 million shares, which will amount to less than 9.5% of its total shares after the offering, according to a statement the company issued Friday. The nominal value of each share will be 1 yuan ($0.14).

If successful, the A-share IPO would make CICC the 13th mainland brokerage to be listed in both Hong Kong and the mainland. Others include GF Securities Co. Ltd., Citic Securities Co. Ltd. and China Merchants Securities Co. Ltd. For all 12 of the companies, the prices of their mainland shares are higher than their shares in Hong Kong.

CSC Financial Co. Ltd.’s mainland shares, for example, were trading 426% higher than its Hong Kong shares on Monday. That’s the biggest price gap of the 12 brokerages. But even for the brokerage with the lowest premium rate, Guotai Junan Securities Co. Ltd., its mainland shares were still priced 51% higher than its shares in Hong Kong on Monday.

CICC Shanghai IPO would be “beneficial for the company to further increase its capital, strengthen balance sheet,” the company’s statement said.

The brokerage also cited opportunities on the mainland capital markets as China proceeds with upgrading and reforming its economy. The traditional securities business is expected to be stable, but there will also be emerging opportunities in derivatives, fintech and the mainland’s new tech board.

The company said the IPO proposal will be submitted for shareholder approval in April. The IPO process will be able to begin once shareholders and financial regulators sign off.

As the first Sino-foreign joint-venture investment bank, CICC’s businesses include investment banking, stock trading, bond trading, asset management and research. After helping (link in Chinese) some 60 state-owned enterprises restructure and go public in Hong Kong, the brokerage underwent its own listing in the city in November 2015.

CICC expanded its retail brokerage and wealth management businesses by buying China Investment Securities Co. Ltd. for 16.7 billion yuan in 2016, which was renamed China CICC Wealth Management Securities Co. Ltd. last year.

CICC’s largest shareholder is Central Huijin Investment Ltd., an investment arm of China’s sovereign wealth fund, which owns 46.2% of the firm, according to its third-quarter report. Appliance manufacturer Haier Group Corp. is CICC’s second-largest shareholder with a 9.5% stake, while internet giants Alibaba Group Holding Ltd. and Tencent Holdings Ltd. also have equity. CICC had 322.9 billion yuan in total assets at the end of September, the report said.

According to data (link in Chinese) from the Securities Association of China, a self-regulatory body for the industry, CICC was the mainland’s ninth-largest brokerage in 2018 in terms of total assets. It was ranked sixth in terms of revenue.

Friday’s statement said the board of directors elected Shen Rujun as chairman for a three-year term. Shen has been at CICC since June 2019. He also serves as president of Central Huijin.

At the end of last year, CICC named company veteran Huang Zhaohui as its new chief executive.

Contact reporter Guo Yingzhe (yingzheguo@caixin.com) and editor Michael Bellart (michaelbellart@caixin.com)

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