Haitong Securities is tipped to raise the indicative price range for its Hong Kong listing, pulling up its fund-raising target to HK$13.7 billion in what is expected to be the biggest initial public offering so far this year.
Its Hong Kong listing price now ranges from HK$10.38 to HK$11.18 per share, compared to its closing price of 10.23 yuan (HK$12.72) on the Shanghai Stock Exchange yesterday.
The new indicative price range is in contrast to the numbers released last December, which was fixed at HK$9.38 to HK$10.58 per share and aimed to raise HK$13 billion.
That reflected the rebound in the mainland brokerage firm's A-share price, for stocks traded in Shanghai and Shenzhen. It had since recovered from its trough of 7.41 yuan in December, when it was forced to shelve its plan for an offering.
Market sources said the listing was expected to be in the middle range of the listing price. Under existing rules, however, H shares (mainland stocks listed in Hong Kong) cannot be offered at a discount of more than 15 per cent on the A-share price.
Haitong would also aim to start trading in Hong Kong by the end of this month, they said, as mainland financials were performing well.
Citic Securities, Haitong's larger rival, closed at HK$16.36 yesterday, up almost a quarter of its listing price. Citic had braved the choppy market conditions in October last year to raise US$1.7 billion at HK$13.30 per share, becoming the first mainland brokerage firm to list in Hong Kong.
But Haitong's listing would also be the first mega-offering, rolled over from last year, to push through after stock markets recovered from the threat of China's hard landing and concerns about the euro-zone crisis deteriorating further.
Last year, several giant deals above US$1 billion were scrapped, including those of Sany Heavy Industry and XCMG Machinery, which aimed to raise US$3.3 billion and US$1.2 billion respectively, along with China Everbright Bank, which was expected to raise US$1.9 billion.
Sany and XCMG scrapped the re-launch of their listing plans in the first quarter of this year as the slowdown in the mainland's economic growth overshadowed the construction sector.
According to Reuters, Haitong has secured 11 cornerstone investors, providing US$580 million. These include pan-Asia private equity firm PAG, which had agreed to buy US$300 million worth of shares; New York-based investment firm DE Shaw; Japan's SBI Holdings; and Hong Kong's Dah Sing Bank.
Haitong's shares will be open for public subscription from today until Friday, and trading will commence on April 27.