China Merchants Securities and China Reinsurance (Group) are preparing for multibillion-dollar initial public offerings (IPO) in Hong Kong, as China’s markets continue to see major slumps.
Two people with direct knowledge of the deals said that China Merchants Securities Co is planning on submitting an application to Hong Kong’s stock exchange attempting to acquire approval for a major initial share sale in the next few weeks.
China’s sixth-largest brokerage by assets, and an already Shanghai listed company, is planning on listing in Hong Kong in the fourth quarter of 2015. Last year it decided to raise around US$4 billion in June in Hong Kong, but with its stock markets facing major selloffs and challenges, the new target will be lower than before.
China Merchants Securities revealed its plans to go public in Hong Kong last May in a filing to the Shanghai Stock Exchange. It said it planned to issue up to 1.2 billion shares but gave no additional details.
China’s largest reinsurer, China Reinsurance Corp is also in the process of listing in Hong Kong after it sent an application for a US$2 billion listing despite the major volatility occurring in Asian markets. The reinsurance firm will be working with China International Capital Corp, UBS and HSBC to handle its listing.
China Re currently has virtually a monopoly on China’s reinsurance market, and its business wealth management to life reinsurance, and competes with global players including Munich Re and Swiss Re.
Last Friday, China Railway Signal & Communication Corp, a provider of rail transportation control system solutions in China and globally, raised US$1.42 billion after listing in Hong Kong. Citi, Morgan Stanley and UBS are among banks that worked with China Railway Signal’s IPO plan.
Recently investors have been avoiding investing in IPOs after being burned in Chinese markets recently. Last July, The Shanghai Composite Suffered one its worst months in history, hitting an six year low. Beijing has issued extraordinary measures to prop the market, including suspending IPOs, buying back stocks, and forcing owners to not sell stock.
