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Haitong Securities Raises $1.7 Billion in Hong Kong IPO

Haitong Securities Said Set to Raise $1.7 Billion in Share Sale
Employees work inside a branch of Haitong Securities Co. in Beijing, China. Photographer: Nelson Ching/Bloomberg

Haitong Securities Co., the third-biggest publicly traded Chinese brokerage, raised HK$13 billion ($1.7 billion) in Hong Kong’s biggest first-time stock sale since December.

The company, already listed in Shanghai, sold about 1.23 billion shares at HK$10.60 apiece, near the bottom of a range marketed to investors, according to a Hong Kong stock exchange filing yesterday. The shares were originally offered at HK$10.48 to HK$11.18 each, according to the offering prospectus.

Haitong’s share sale is about 40 percent bigger than the total amount raised in first-time offerings in Hong Kong in the first quarter, data compiled by Bloomberg show. Initial share sales in the city are off to their slowest start to a year since 2009, with investors steering clear of new equity even after the benchmark stock index advanced 14 percent.

Haitong, based in Shanghai, has a market value of 85 billion yuan ($13.5 billion), according to data compiled by Bloomberg. The country’s two largest brokerages are Beijing-based Citic Securities Co. and GF Securities Co. in Guangzhou, the data show.

The offer price values Haitong at about 1.31 times its estimated 2012 book value, compared with 1.67 times for Citic Securities’ Hong Kong-traded shares, according to data compiled by Bloomberg. Haitong will begin trading in Hong Kong April 27.

Offer Discount

Citic Securities raised about $1.7 billion in a first-time share sale in Hong Kong in September. The stock has gained 24 percent from its offer price of HK$13.30.

Haitong’s offer price is 17 percent below its close of 10.33 yuan yesterday in Shanghai. It also implies a 10 percent discount to the volume-weighted average price over the last 20 trading days, adjusted for a dividend to be paid to investors in China. Chinese regulators typically require state-owned companies that sell shares overseas to cap the discount to their domestic share prices at 10 percent.

Chow Tai Fook Jewellery Group Ltd., the world’s biggest listed jewelry chain, raised about $2 billion in a Hong Kong initial sale in December. The company’s stock has fallen 21 percent from the offer price.

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