Caixin
Sep 03, 2020 05:33 AM
FINANCE

CICC Slashes Planned Mainland IPO Size Back to Original Plan

China International Capital Corp. Ltd. will issue as many as 458 million shares in its mainland IPO.
China International Capital Corp. Ltd. will issue as many as 458 million shares in its mainland IPO.

China International Capital Corp. Ltd. (CICC) scrapped plans announced in July to more than triple the size of its Chinese mainland initial public offering (IPO) and went back to the originally estimated scope.

The Hong Kong-listed Chinese investment bank will issue as many as 458 million shares on the Shanghai Stock Exchange, or 9.5% of its total shares after the offering, according to the prospectus disclosed Tuesday by the China Securities Regulatory Commission. CICC hasn’t priced the issue or estimated how much money it expects the offering to raise.

CICC first announced in February plans to issue 458 million A-shares, then in July said it would issue as many as 1.4 billion shares because its earlier plan could no longer meet its capital needs for expanding the business. Beijing-based CICC didn’t explain why it dropped that plan.

CICC said the proceeds from the offering will be used to supplement the company’s working capital and support its domestic and overseas business development to achieve a reasonable return on capital as soon as possible. But the company warned that it would take time for the capital investment to generate benefits, and there is a risk of shareholder returns being diluted.

The company will further strengthen its investment in fintech and international strategic fields and seize strategic merger and acquisition opportunities at the appropriate time, according to the prospectus.

As the first Sino-foreign joint-venture investment bank founded in 1995, CICC has been an underwriter for many Chinese enterprises’ overseas offerings. After helping (link in Chinese) some 60 state-owned enterprises restructure and go public in Hong Kong, the company underwent its own listing in the city in November 2015.

Its current biggest shareholder is Central Huijin Investment Ltd., an investment arm of China’s sovereign wealth fund, with 46.2%, according to the company’s 2019 annual report. Appliance manufacturer Haier Group Corp. is the second-largest shareholder with 9.5%. Morgan Stanley, the company’s large initial shareholder, sold its 34.3% stake in CICC several years ago to a handful of entities including Singapore’s sovereign wealth fund.

Tencent Holdings and Alibaba Group each holds a less than 5% of CICC.

In the first half of 2020, CICC posted revenue of 14.29 billion yuan ($2.09 billion), up 40% year-on-year. Its net profit attributable to shareholders grew more than 60% to 3.05 billion yuan.

CICC acted as the lead underwriter for 13 A-share IPOs and five A-share refinancing projects in the first six months of 2020. It is now underwriting financial-technology giant Ant Group Co. Ltd.’s $30 billion concurrent IPOs in Hong Kong and Shanghai.

Contact reporter Denise Jia (huijuanjia@caixin.com) and editor Bob Simison (bobsimison@caixin.com)

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