Haitong International Securities Group Ltd., a unit of China’s biggest brokerage, is “willing to pay what’s needed” to lure bankers from U.S. and European firms as it seeks to double its investment-banking workforce, said incoming Chief Executive Officer Lin Yong.
Haitong International, created after Haitong Securities Co. bought Hong Kong’s Taifook Securities Co. in 2009, aims to boost its 75-person investment banking division by 50 percent to 100 percent, joint Managing Director Lin said in an April 20 interview. Lin will become the Hong Kong-based company’s CEO after a shareholders’ meeting on April 29.
“We want to hire the highest-ranking bankers,” Lin said. “I’m willing to pay what’s needed to get bankers from European and U.S. investment banks.” The firm plans to start a fixed-income team and add bankers to its corporate finance, institutional sales and research groups, he added.
Haitong and Chinese rivals such as ICBC International Holdings Ltd. are trying to take market share from Goldman Sachs Group Inc. and Morgan Stanley in Hong Kong, where the value of stock sales surged to a record last year. Companies including Prada SpA plan about $20 billion of initial stock sales in the city in the three months through June, which would be a record for a second quarter in the city, Bloomberg data show.
Four Chinese firms -- BOC International Holdings Ltd., Citic Securities Co., BoCom International Ltd. and China International Capital Corp. -- are among the top 10 underwriters of stock sales in Hong Kong this year, data compiled by Bloomberg show.
Hui Xian IPO
Haitong Securities, based in Shanghai, said yesterday that first-quarter profit jumped 17 percent to 1.19 billion yuan ($182 million), bolstered by its underwriting business. The company, which was suspended from trading in Shanghai on April 21, today said it plans to sell shares in Hong Kong, joining Chinese rival Citic Securities.
Hong Kong will have more regular sales of yuan-denominated shares as offshore deposits of the currency increase, K. C. Chan, the city’s secretary for financial services and the treasury, said in an interview last week. The first yuan IPO, a listing of billionaire Li Ka-shing’s Hui Xian Real Estate Investment Trust, will start trading this week after raising $1.6 billion.
Lin said yuan financial products will take over from “Made in China” manufactured goods as “China’s biggest contribution to the world economy” in the coming decade. Haitong’s local knowledge allows it to play a “more active role” in bringing companies to market, he said.
“Our investment banking arm has been exchanging ideas with many clients on whether they should proceed with traditional IPOs or yuan IPOs,” he said. “Many new businesses tend to grow slowly and in a cautious manner at the beginning. Once they are developed, the growth will accelerate.”
Goldman Sachs is the top-ranked underwriter of equity in Hong Kong this year, followed by HSBC Holdings Plc, Bloomberg data show. Haitong, which was 26th last year, hasn’t arranged any sales so far in 2011, according to the data. Haitong Securities ranks fourth in arranging share offerings in Shanghai and Shenzhen this year.
ICBC International, the securities unit of the world’s largest bank by market value, plans to hire more people from global rivals, Mary MacLeod, who joined the firm from Deutsche Bank AG in January, said in an interview in February.
Lin didn’t specify which rival banks he plans to hire from.
Matching the pay offered by firms like New York-based Goldman Sachs and Frankfurt-based Deutsche Bank has been a major obstacle for Chinese securities companies trying to expand, executives and headhunters have said. UBS and HSBC Holdings Plc are among global companies that have said stiffer competition for bankers in Asia has driven up pay, squeezing margins.
Competition from Chinese securities firms has helped push fees lower, investment bankers have said. The average fee from underwriting share sales in Hong Kong is 2.36 percent this year, Bloomberg data show. While that marked a recovery from last year’s 2.19 percent, it is below the average 2.75 percent over the preceding decade, according to the data.
Haitong’s biggest Hong Kong deal was the HK$31.2 billion ($4 billion) offering by of China Minsheng Banking Corp. in November 2009. The transaction vaulted it to 14th place among underwriters that year, Bloomberg data show.
At least 10,000 Chinese companies are considering going public, mostly in Shanghai or Shenzhen, Lin said, adding that some IPOs will rival the size of Agricultural Bank of China Ltd., which raised a record $22.1 billion in Hong Kong and Shanghai last year.