Haitong Securities Scraps $1.7 Billion Hong Kong Share Sale on Volatility
Haitong Securities Co. (600837), China’s third-biggest brokerage by market value, canceled plans to raise as much as $1.7 billion in a first-time share sale in Hong Kong because of volatile stock markets.
Haitong will revive the sale later, according to a Shanghai stock exchange filing yesterday. It didn’t give details. Haitong Securities offered 1.23 billion shares at HK$9.38 ($1.21) to HK$10.58 each and planned to start trading in Hong Kong on Dec. 15, according to the sale prospectus.
The company’s struggle to woo investors reflects stock- market swings. Chow Tai Fook Jewellery Group Ltd. and New China Life Insurance Co. sold a combined $3.3 billion of first-time shares in Hong Kong at or near the low end of price ranges last week. The city’s Hang Seng Index (HSI) fell 2.7 percent on Dec. 9, the biggest drop in a month. The benchmark was little changed yesterday.
“Concerns about an oversupply of new stock had investors cautious,” said Michiya Tomita, a Hong Kong-based fund manager at Mitsubishi UFJ Asset Management Co., which oversees $65 billion globally.
Haitong Securities’ price range would have valued it at 1.17 to 1.32 times its estimated 2012 book value per share ,an unidentified person said. That compares with an average price- book ratio of 1.51 for 11 brokerages listed in China, according to data compiled by Bloomberg.
Shares in Haitong Securities fell 0.6 percent to 8.26 yuan in Shanghai yesterday, giving the brokerage a market value of 68 billion yuan ($10.7 billion). Chinese state-controlled companies typically don’t sell stock in Hong Kong at more than a 10 percent discount to existing shares.
Citic Securities Co., China’s largest brokerage by market value, has risen 0.2 percent in Hong Kong since raising $1.7 billion in the city in September. Citic Securities sold stock at a 5.4 percent discount to its share price in Shanghai.
Haitong Securities’ Hong Kong investment banking unit, JPMorgan Chase & Co., Credit Suisse Group AG, Deutsche Bank AG and Citigroup Inc. managed the offering.
Chow Tai Fook, which operates more than 1,400 jewelery outlets in greater China, raised $2 billion selling shares at HK$15 each, the bottom of a marketed range, on Dec. 9.
New China Life Insurance Co., the nation’s third-largest life insurer, raised $1.3 billion in the Hong Kong portion of an IPO last week. That was close to the low end of the price range, reflecting sluggish demand for new equity.
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