Fujian broker mulls Hong Kong float in expansion
Faced with dwindling share trading income on the mainland, Industrial Securities is exploring overseas markets for new revenue sources
Industrial Securities, a medium-sized brokerage on the mainland, is considering a listing in Hong Kong as it follows bigger domestic rivals in exploring overseas markets.
Liu Zhihui, the president of the Fujian company, said it would also look for acquisition targets abroad to reinforce its global expansion.
"When conditions are ripe, we will make investments to achieve our goal of globalisation through mergers and acquisitions as well as a H-share listing," Liu told a media briefing in Shanghai. "The moves will help our company expand faster."
He did not disclose details such as the fundraising size and timeframe for the expected Hong Kong initial public offering.
Industrial Securities is the latest mainland brokerage to unveil its ambitions of going global after the country's largest brokerages including Citic Securities and Haitong Securities listed in Hong Kong while making acquisitions overseas.
Citic Sec bought CLSA Asia-Pacific Markets while Haitong acquired Taifook Securities as the two mainland firms spearheaded a "go outbound" campaign to diversify revenue sources.
On the mainland, securities firms rely heavily on brokerage fees from retail investors' trading of shares.
However, a bearish market in the past three years prompted the companies to seek new growth engines, with the mainland regulator encouraging them to revamp their businesses through innovation.
The China Securities Regulatory Commission has allowed brokerages to conduct margin trading and short selling, launch mutual funds and invest in private equity deals to help them offset dwindling brokerage fees.
Mainland brokerages can now raise yuan funds in Hong Kong by selling renminbi qualified foreign institutional investor products for A-share investments.
In May 2011, Industrial Securities set up a Hong Kong subsidiary as an initial step towards its globalisation drive.
Liu said the unit would be used as a platform for overseas expansion.
"We will be looking for proper acquisition targets that can help us better serve institutional clients," he said. "Overseas expansions are encouraged by the regulator but we don't want to set a timetable now."
Industrial Securities raised 2.6 billion yuan (HK$3.2 billion) on the share market in 2010 and its net assets were valued at 8.7 billion yuan at the end of last year.
The company is fine-tuning its brokerage businesses in what Liu described as an upgrade of asset management services for high-net-worth individuals.
It has also received regulatory approval to raise five billion yuan through additional share sales on the mainland market.
Industrial Securities was last year ranked 20th among mainland securities firms in terms of revenue. Liu said it aimed to become one of the top 10.