Shanghai International (HK), the locally listed vehicle of China's largest brokerage, Shenyin and Wanguo Securities, appears to have found a way to acquire a stake in local brokerage Sun Hung Kai & Co (SHK & Co), which it tried but failed to take over in August.
SHK & Co, where Allied Properties bought a 33.1 per cent stake earlier this year, yesterday said it would launch a rights issue to raise almost $500 million to reduce debt.
Shanghai International Capital (HK) - the brokerage arm of mainland-owned Shanghai International (HK) - and CEF Capital have been appointed underwriters.
Allied Properties has agreed to take up its full entitlement while the two brokers will underwrite the remaining 66.82 per cent of the issue.
'The rights issue is an alternative for Shanghai International to gain access to SHK Securities,' a company source said.
According to Hong Kong and mainland securities executives, the change of sovereignty is encouraging mainland brokers to secure a foothold in the territory.
Shanghai International backed out of talks to acquire SHK & Co in the final stages after the People's Bank of China opposed the deal.