Founder Securities in 10b yuan IPO
Founder Securities, a mid-sized mainland brokerage, plans to launch an initial public offering on the Shanghai Stock Exchange that is expected to raise about 10 billion yuan (HK$12 billion) amid a market downturn.
The securities firm said in a preliminary prospectus that it plan to float 1.5 billion shares, or 24.6 per cent of its enlarged capital, but did not give a targeted size for the offering.
It will be the first mainland brokerage to go public this year.
Based on the valuations of listed brokerages, it could net about 10 billion yuan on the market, analysts said. Founder, the 16th largest mainland brokerage, said it would use the proceeds to expand outlets and bolster its investment banking business.
The Hunan-based company owns 66.7 per cent of Credit Suisse Founder, a joint-venture investment bank with Credit Suisse.
The China Securities Regulatory Commission will review Founder's IPO application on Monday. It is likely to get the go-ahead since the regulator has been encouraging domestic brokerages to issue IPOs for expansions.
A total of 16 brokerages including Citic Securities, the mainland's largest, are traded on the Shanghai and Shenzhen exchanges.
Founder, along with Guosen Securities and Essence Securities, have been looking to launch IPOs this year despite the weak market sentiment. The Shanghai Composite Index continued its seven-day losing streak yesterday, dropping 0.97 per cent to 2,709.95. Since May 18, it has slid 5.7 per cent.
Investors have been reluctant to play stocks amid a flood of IPOs and expectations of further tightening.
On Monday, the index fell 2.91 per cent to hit the lowest close since February 10, when the market was rife with speculation of an imminent launch of an international board.
'The market is expected to go down even further, though investors had thought it could get a technical support at the 2,700-point level,' Shenyin Wanguo Securities analyst Wei Daoke said.