GF Securities Said to Plan High-End Price for Share Sale

GF Securities Co., the seventh-biggest Chinese brokerage by market value, plans to sell shares in Hong Kong at the top end of a marketed range to raise HK$27.9 billion ($3.6 billion), people with knowledge of the matter said.

The Guangzhou-based company plans to sell 1.48 billion shares at HK$18.85 each, said the people, who asked not to be identified because the information is private. The price is 45 percent lower than GF Securities’s close Monday in Shenzhen.

GF Securities is raising money in the biggest Hong Kong share sale this year to fund margin financing as a stock-market rally boosts transaction volumes in China. Citic Securities Co., the country’s biggest brokerage by market value, and Haitong Securities Co. are planning Hong Kong offerings that could raise more than $9 billion.

The brokerage’s shares surged as much as 9.5 percent, touching the highest level since 2010, before paring the gain to 4.2 percent as of 1:05 p.m. local time on Tuesday.

Proceeds from GF Securities’s offering will be used to develop margin financing, investment banking, wealth management and international business, according to its IPO prospectus. It offered the shares at HK$15.65 to HK$18.85 apiece, the document shows.

IFR reported the pricing earlier Tuesday in Hong Kong, citing an unidentified person. A Hong Kong-based external spokeswoman for GF Securities declined to comment.

Book Value

The top end of the marketed range values GF Securities at 1.62 times estimated book value and 13.9 times estimated profit in 2015 after the sale, the people said. Citic Securities trades in Hong Kong at 2.36 times book value and 21.4 times estimated earnings this year, according to data compiled by Bloomberg. The market leader’s Hong Kong shares closed yesterday at a 29 percent discount to its Shanghai stock.

GF Securities expects to start trading April 10, the prospectus shows. Goldman Sachs Group Inc. and GF Securities’s Hong Kong unit are joint sponsors of the share sale.

(An earlier version of this story corrected the description of GF’s market value in the first paragraph.)

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