Everbright Securities Draws State Firms to $1.2 Billion Offering

  • Prudential, China Life agree to become cornerstone investors
  • Brokerage aims to boost margin lending, overseas businesses

Everbright Securities Co. attracted eight cornerstone investors, including China’s largest insurer, to a Hong Kong first-time share sale that could raise as much as $1.2 billion.

The Shanghai-based brokerage is offering 680 million shares at HK$11.80 to HK$13.26 apiece, according to a prospectus posted to the Hong Kong stock exchange Monday. Cornerstone investors including state-owned China Shipbuilding Industry Corp. and China State Construction Engineering Corp. will buy as much as $789 million of stock, the filing shows. 

China Life Insurance (Group) Co. agreed to invest $80 million, while U.S. insurer Prudential Financial Inc. and Chinese taxi operator Dazhong Transportation (Group) Co. each agreed to buy $30 million of stock.

Everbright Securities is selling shares in Hong Kong to expand margin financing and fund potential acquisitions after trading volumes in the Chinese stock market fell this year. The offering would be the city’s second Chinese brokerage listing this year, following the $1.1 billion offering from Orient Securities Co. in June, data compiled by Bloomberg show.

Cornerstone Buyers

Hong Kong first-time share sales have raised $8.6 billion this year, down from $20.1 billion during the same period in 2015, according to the data. Everbright Securities, which started taking investor orders Monday, aims to price the offering Aug. 11 and start trading in Hong Kong on Aug. 18, the prospectus shows.

Guangdong Hengjian Investment Holding Co., owned by the government of the southern Chinese province, will buy 113 million shares in the offering, while an asset-management unit of Bank of Communications Co. committed $50 million, according to the prospectus. 

Cornerstone investors account for 76 percent of the Everbright Securities share sale at the low end of the marketed range, data compiled by Bloomberg show. Such stock buyers agree to keep their holdings for six months in return for early, guaranteed allocation.

Everbright Securities plans to use 35 percent of the proceeds to support its customers’ financing needs, including actively expanding its margin-lending business, seeding more private equity funds and boosting acquisition financing for its investment-banking clients. Another 35 percent will go toward funding its overseas businesses and potential acquisitions, according to the prospectus.

China Everbright Capital Ltd., UBS Group AG and Bank of America Corp. are joint sponsors of the listing.

    Before it's here, it's on the Bloomberg Terminal.