Photographer: Xaume Olleros/Bloomberg

CSC Financial’s Hong Kong IPO Seeks as Much as $1.06 Billion

  • Cornerstone investors will buy about $597 million of stock
  • Citic, China Structural Reform Fund to purchase shares in IPO

CSC Financial Co., the Beijing-based brokerage and investment bank, and an existing shareholder are seeking as much as $1.06 billion in a Hong Kong initial public offering.

The company, formerly known as China Securities Finance Co., and the National Social Security Fund are offering a combined 1.13 billion shares at HK$6.36 to HK$7.26 apiece, according to terms for the deal obtained by Bloomberg on Monday. Cornerstone investors will buy about $597 million of stock, representing 60 percent of the base deal size, assuming the IPO prices at the midpoint of the marketed range, the terms show.

A stock offering would add to the $17.2 billion in Hong Kong first-time share sales from financial firms this year, accounting for about three-quarters of the fundraising from the city’s new listings in 2016, data compiled by Bloomberg show. Domestic brokerages like CSC Financial have been selling shares in Hong Kong to fund expansion overseas.

“It’s part of their job as a state-owned enterprise to seek a listing as the country is opening up the capital markets,” Li Bin, a Shanghai-based analyst at Capital Securities Corp., said by phone Monday. “That will help CSC gain more market share in areas such as brokerage and margin financing, because the securities space in China is rather competitive.”

Cornerstone Buyers

Citic Ltd. agreed to buy about $309 million of stock as a cornerstone investor, according to people with knowledge of the matter. China Structural Reform Fund, a 350 billion yuan ($50.7 billion) investment vehicle created to finance state-owned-enterprise restructuring, committed about $99 million, said the people, who asked not to be identified as details are private.

Taiping Life Insurance Co. will invest $50 million, while seven other investors including Daiwa Securities Group Inc. and China Huadian Corp. each committed $20 million, according to the people. Such stock buyers agree to keep their holdings for six months in return for early, guaranteed allocation.

CSC Financial will take investor orders through Dec. 2, Monday’s terms show. It plans to price the offering and allocate shares the weekend of Dec. 3 to Dec. 4 and aims to start trading Dec. 9.

The brokerage was China’s 10th-biggest securities firm by net income in 2015, trailing China Galaxy Securities Co. at No. 8 and Huatai Securities Co. at No. 9, according to the Securities Association of China. The top three by that measure were Citic Securities Co., Guotai Junan Securities Co. and Haitong Securities Co.

China Securities International Finance Holding Co., UBS Group AG and ABC International Holdings Ltd. are joint sponsors of the offering.

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