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IPO

IPO

Galaxy Securities IPO raises HK$8.3b

State-owned broker prices share offering at low end amid investor concern over earnings

PUBLISHED : Thursday, 16 May, 2013, 12:00am
UPDATED : Thursday, 16 May, 2013, 3:53am

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China Galaxy Securities, the country's sixth-biggest brokerage firm by revenue, has raised HK$8.3 billion from its long-planned Hong Kong listing.

The state-owned brokerage firm sold 1.57 billion shares at HK$5.30 per share, near the bottom of its range between HK$4.99 and HK$6.77, after investor concern over its profitability and growth strategy in the highly fragmented mainland brokerage market.

Galaxy Securities is controlled by Central Huijin Investment, a subsidiary of the sovereign wealth fund China Investment Corp.

The shares will start trading on Tuesday.

The mainland's brokerage industry is highly fragmented, with the top 10 firms representing only 45 per cent of the overall market, according to the company.

Galaxy Securities hired a record 21 investment banks for the flotation, highlighting the sluggishness in Hong Kong's listing market and poor demand for new shares in the face of tepid trading conditions.

Net profit at Galaxy Securities dropped 10.6 per cent to 1.43 billion yuan (HK$1.8 billion) last year, while cash and cash equivalents fell 67 per cent to 3.9 billion yuan, according to its listing document.

The company plans to use most of the new capital to expand its risky and lucrative margin financing and securities lending business.

Separately, Sinopec Engineering, a unit of Sinopec Group, Asia's biggest refiner, narrowed the indicative price range for its shares to between HK$10.50 and HK$11, below the mid-point of the previous price range, according to people with direct knowledge of the deal.

The price is expected to be fixed today.

With the latest price range, Sinopec Engineering could raise up to HK$14.6 billion from its offering of 1.33 billion shares.

Meanwhile, Mando China, a spin-off from car parts supplier Mando Korea, is preparing to raise up to US$270 million to fund its expansion plans on the mainland.

Great Eagle and New World Development are also planning to spin off their hospitality assets, while Hopewell is considering raising US$800 million by listing its Hong Kong property assets.