Haixia Capital Management Co., a Chinese state-backed investment firm, is seeking as much as $881 million selling its entire stake in Haitong Securities Co. at a discount of as much as 20 percent.
A fund managed by Haixia Capital is offering 569.4 million shares of the Chinese brokerage at HK$11.12 to HK$12 each, according terms for the deal obtained by Bloomberg. The price range represents a 13.7 percent to 20 percent discount to Haitong’s last close in Hong Kong.
Haixia Capital is offloading its stake at a loss after a 45 percent plunge in Haitong’s Hong Kong-traded shares over the past month. A flurry of measures to stabilize the Chinese stock market, including a pledge by state-run financial firms to buy 120 billion yuan ($19.3 billion) of shares and a halt to initial public offerings, is failing to stop a rout that erased more than $3.2 trillion of value.
The fund manager, backed by government-owned State Development & Investment Corp., bought the Haitong shares earlier this year at HK$17.18 each, as part of a $4.2 billion stock sale completed in May, Hong Kong exchange filings show.
Haitong fell 13 percent to close at HK$13.90 in Hong Kong trading on Tuesday. UBS Group AG is sole bookrunner for Haixia’s disposal.
China’s A shares continued to slump on Tuesday as measures to stabilize the market failed to stop a rout that’s erased more than $3.2 trillion in market value. Chinese shares traded in Hong Kong entered a bear market on Tuesday.
The MSCI Emerging Markets Index has fallen about 2.9 percent this year. The MSCI World Index has gained 0.8 percent in 2015.