Citic Securities Sale Said to Raise $1.7 Billion, Less Than Maximum Sought
Citic Securities Co. raised HK$13.2 billion ($1.7 billion) in Hong Kong’s biggest public stock offering in more than three months, two people with knowledge of the matter said.
China’s biggest brokerage by market value sold 995.3 million shares at HK$13.30 apiece, said the people, who declined to be identified because no announcement has been made. The stock was initially offered at HK$12.84 to HK$15.20 before banks managing the sale raised the low end of the range to HK$13.30, they said.
Citic Securities’ sale is the biggest in Hong Kong since Italian fashion retailer Prada SpA raised $2.5 billion in June. The benchmark Hang Seng Index is down 20 percent since June and the value of initial public offerings in the city has fallen by 64 percent from the previous quarter amid Europe’s escalating sovereign debt crisis.
“With a lot of uncertainties surrounding EU countries, investors are reluctant to put their money to work,” said Victoria Mio, a Hong Kong-based fund manager at Robeco, whose fund subscribed to the offering.
The final price is a 7.6 percent discount to Citic Securities price in Shanghai of 11.78 yuan, as of the 11:30 a.m. close of the morning session.
The sale could prove a one-off case, Mio said. “They put money in this one because Citic is a leader in one of the growing brokerage markets where the capital market is continuing to open up.”
The final price values Citic Securities at 1.28 times estimated 2011 book value and 8.95 times forecast 2011 earnings, one of the people said. Sukyi Yau, a Hong Kong-based outside spokeswoman for Citic Securities, declined to comment on the final pricing.
Companies have raised $3.9 billion from IPOs in Hong Kong so far in the third quarter, down from $10.7 billion in the second quarter, data compiled by Bloomberg show. Citic Securities sale comes just days after XCMG Construction Machinery Co. scrapped plans for a $1.1 billion Hong Kong offering and rival construction equipment maker Sany Heavy Industry Co. delayed a $3.3 billion sale.
Singapore’s Temasek Holdings Pte and Kuwait Investment Authority are among so-called cornerstone investors who agreed to buy $850 million of Citic Securities shares, according to a prospectus released on Sept. 21. Cornerstone investors are guaranteed shares in the offering in return for a pledge not to sell their stock immediately.
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