Credit Suisse partner opens 5.8b yuan IPO

PUBLISHED : Saturday, 30 July, 2011, 12:00am
UPDATED : Saturday, 30 July, 2011, 12:00am


Founder Securities, a Chinese partner of Credit Suisse, is expected to raise up to 5.85 billion yuan (HK$7 billion) in an initial public offering, kicking off a new round of IPOs on the weak A-share market.

The mid-sized brokerage set the price range of 3.70 yuan to 3.90 yuan apiece for the 1.5 billion shares on offer. It opened for institutional subscription yesterday and will be open for a day of online subscription on Monday.

The share sale, one of the nine IPOs to be launched on the mainland next week, will help gauge investors' appetite for new stocks amid a sluggish market.

The China Securities Regulatory Commission this month gave the go-ahead to 20 small companies to float new shares in July, a relatively slow pace for IPOs. But a flood of IPOs is expected in the coming weeks because of mainland companies' rising demand for fresh capital.

Founder, which owns 66.7 per cent of Credit Suisse Founder, a joint-venture investment bank, is the first brokerage to go public on the mainland this year.

The targeted proceeds of 5.85 billion yuan will make it the largest IPO so far this year, although Sinohydro Group, a state-owned dam builder, received approval yesterday to launch its IPO, which aims to raise at least 17.3 billion yuan. It has yet to set the time for the offering.

The Shanghai Composite Index slid 2.5 per cent this week, closing at 2,701.73 yesterday, amid weak buying interest. The index, which lost 14.3 per cent last year, is down 3.8 per cent so far this year.

'It seems the market will bottom out soon since the low price-earnings ratio means stocks are undervalued,' said Shenyin Wanguo Securities analyst Wei Daoke, who added the index would meet 'technical support' at the 2,600-point level.

The largest 300 companies listed on mainland exchanges now trade at an average of 13 times their earnings for 2010.

If Founder's shares are priced at the top end, it will offer its shares at a price-earnings multiple of 26.

Founder will join its bigger rivals such as Citic Securities and Haitong Securities in listing on the mainland market, as the CSRC encourages domestic brokerages to raise additional funds for expansions.

Guosen Securities and Essence Securities are also looking to launch IPOs this year.