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Haitong Securities to test HK IPO market
Haitong Securities, a leading brokerage company in China, hs relaunched its Hong Kong initial public offering to raise up to HKD13.74 billion (USD1.77 billion).
Amy Lam 18 Apr 2012
 
   

Haitong Securities, a leading brokerage company in China, has relaunched its Hong Kong initial public offering to raise up to HKD13.74 billion (USD1.77 billion).

 
The Shanghai-listed company is offering 1.229 billion H shares at an indicative range between HKD10.48 to HKD11.18 per share. The price range is slightly higher than the offering range of HKD9.38 to HKD10.58 per share in an earlier attempt made in November 2011. Shares are scheduled to trade on April 27.
 
Haitong had to delay its IPO after it kicked off institutional bookbuild and retail offering due to lucklustre response from investors in a weak market condition.
 
Hong Kong’s IPO market for giant transactions like Haitong Securities has been quiet since Hong Kong jewellery retailer Chow Tai Fook’s IPO in December last year.
 
Sunshine Oilsands, which raised HKD4.49 billion in February, has been the biggest Hong Kong IPO so far this year. In the pipeline are still sizeable deals including China Everbright Bank and Sany Heavy Industries that have been pushed back in 2011.
 
As of December 2011, Haitong Securities has the fourth largest branch network among Chinese securities firms in China, with 216 securities and future brokerage branches located across 27 provinces and 125 cities, according to data from the Shanghai Stock Exchange and the China Futures Association.
 
The company has a dividend policy of paying not less than 30 percent of its average annual distributable profits in any three consecutive fiscal years.
 
This time, the company has secured 11 cornerstone investors taking up a total of USD577 million or more than one-third of the targeted offering size. The introduction of cornerstone investors can be crucial to whether a deal can be closed in uncertain market conditions. There is a lock-up of six months.
 
Private equity firm PAG will take up the biggest amount with USD300 million worth of shares, followed by asset management company D.E. Shaw Valence International’s USD100 million. In addition, Japan’s SBI Holdings, Taiwan’s  KGI Securities and Oman Investment Fund, will each subscribe to USD30 million worth of shares.
 
Other cornerstone investors include Korean securities company Leading Investment, China-focussed asset manager Albertson Sumitomo Mitsui Trust Bank as well as Tokyo Securities and Dah Sing Financial Holdings.
 
Haitong will use about 35 percent of the net proceeds to fund overseas acquisitions or expansion and 20 percent for expansion in margin financing and its securities lending business in China. Another 20 percent and 15 percent will be used for expanding alternative financial investment business and private equity respectively. About 10 percent will be used for working capital.
 
Haitong Securities is the second mainland securities firm to list in Hong Kong, following CITIC Securities, which successfully listed in Hong Kong last year. Their Hong Kong debuts are in line with their internationalization strategy.
 
Haitong reported 2011 full year revenue of 10.86 billion renminbi, a 3.9 percent decrease from the previous year while profit dropped 15 percent to 3.28 billion renminbi as the domestic stock market remains challenging.
 
Haitong and J.P. Morgan are the joint sponsors and together with Credit Suisse, Deutsche Bank, Citi and UBS, are also the joint global coordinators and bookrunners. HSBC, Nomura, Standard Chartered and BOCOM International are joint bookrunners.
 
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