China broker GF Securities plans to raise up to US$1b in Hong Kong listing

PUBLISHED : Saturday, 03 May, 2014, 4:00am
UPDATED : Saturday, 03 May, 2014, 7:44am

GF Securities, the mainland's fourth-largest broker by assets, is seeking a Hong Kong listing in a deal that could raise up to US$1 billion.

Coming right after the world's largest pork producer, WH Group, called off its own initial public offering (IPO) because of a lacklustre market, the Guangzhou-based broker's funding plan coincides with that of Central China Securities.

A Zhengzhou-based brokerage, Central China Securities could raise about US$300 million to US$400 million in Hong Kong next month, after waiting for more than a year to list on the Shanghai stock exchange.

GF Securities has not appointed any bank to handle the transaction yet.

CCB International, the sponsor for the Central China Securities offering, is aiming for a hearing with the Hong Kong stock exchange in the middle of this month, two people with knowledge of the listing process said.

"The issuer and bankers have lowered their expectations after WH Group's aborted listing," said one of the sources.

Battered by poor market conditions, WH Group, which made headlines after acquiring Smithfield Foods for US$4.7 billion, has postponed a much smaller deal after an original US$6 billion listing plan found few takers.

Wendy Lam, chief executive of GF Holdings (Hong Kong), the overseas unit of the mainland broker, declined to comment on the parent firm's proposed share sale in Hong Kong.

Lam oversees the mainland broker's securities brokering, futures, and asset management in Hong Kong.

If Central China Securities' IPO plan goes ahead, GF Securities would be the fifth mainland broker to list on the Hong Kong stock exchange, after China Galaxy Securities in May last year, Shanghai-headquartered Haitong Securities in 2012, and Beijing-based China Citic Securities in 2011.

According to Citic Securities' latest annual report, the mainland's securities sector is consolidating. The top five players accounted for 39 per cent of the industry's overall net profit last year, compared with 27 per cent in 2011.

"Beijing is urging mainland brokers to take a more active role in differentiating their business model before a full liberalisation of the capital markets," said a fund manager based in Hong Kong who did not want to be identified.