Citic Securities Co., China’s biggest brokerage by market value, will raise as much as HK$27.1 billion ($3.5 billion) selling stock to 10 investors, including sovereign wealth funds in Kuwait, Singapore and Malaysia.
The company will sell as many as 1.1 billion new Hong Kong-listed shares at HK$24.60 each, according to a statement to the Hong Kong stock exchange on Monday. That’s a 19 percent discount to Monday’s closing price. Citic shares have risen 3.6 percent this year.
China’s brokerages have been selling shares as the nation’s stock-market boom boosts their earnings. Shenwan Hongyuan Group Co. said on June 12 that it plans to raise as much as $2.9 billion in a private placement. Guotai Junan Securities Co. is set to price a share sale this week that may be China’s biggest since 2010.
Shares of Citic Securities gained 0.8 percent in Hong Kong as of 9:56 a.m. local time, as the Hang Seng Index dropped 0.2 percent. The company’s stock jumped 2.1 percent in Shanghai. The Hong Kong stock advanced 3.8 percent this year, compared with the Hang Seng Index’s 14 percent climb.
The Shanghai Composite Index has surged 141 percent in the past year on a record jump in margin debt and bets the government will lower borrowing costs. It’s valued at 19 times 12-month projected earnings, compared with the five-year average of 10.3, according to weekly data compiled by Bloomberg.
The group of investors buying Citic shares include a China Cinda Asset Management Co.-backed fund, the Kuwait Investment Authority, Singapore’s GIC Pte and its Temasek Holdings Ltd., and a unit of Malaysia’s Khazanah Nasional Bhd.
Additional investors include Yunfeng Financial Holdings Ltd., backed by Alibaba Group Holding Ltd.’s billionaire founder Jack Ma, and funds run by Fidelity Worldwide Investment, Och-Ziff Capital Management Group LLC and Harvest Global Investments. One buyer wasn’t identified by name.
Citic said it plans to use about 70 percent of the money to develop “flow-based” operations, including margin financing, securities lending, equity derivatives and fixed-income, foreign-exchange and commodities products. It will use about 20 percent of the funds to develop cross-border operations and for platform building, and the balance as working capital.
Earlier this year, Citic said plans to sell as many as 1.5 billion new shares in Hong Kong remain unchanged. Monday’s sale was under that mandate, it said. The company said its CLSA Ltd. unit was the placing agent.