Bocom International to raise up to $304 million in Hong Kong IPO
The securities brokerage is selling 666.68 million shares, priced between HK$2.60 and HK$3.10 a piece
Bocom International will offer 666.68 million shares, where 10 per cent will be Hong Kong public shares and the remainder to be offered to international investors. Based on an offer price of HK$2.85 - the mid-point of the offer price range of HK$$2.60 to HK$3.10 - the net proceeds from the IPO will be about HK$1.794 billion, the company said.
It will use the proceeds of the IPO for expansion, including in the areas of margin financing business and in the asset management and advisory business.
Established in 1998, Bocom International recorded profits of HK$351.0 million in 2016, HK$350.8 million in 2015 and HK$23.7 million in 2014. Commission and fee income was HK$486.8 million in 2016, HK$690.7 million in 2015 and HK$343.5 million in 2014.
But the securities brokerage and margin financing businesses generally deliver thin margins due to stiff competition from online brokerages.
Its interest income from margin financing was HK$331.9 million in 2016, down from HK$393 million in 2015 because of the adjustments made to the company’s businesses after taking into account market conditions and reputation, Bocom International said, without providing further details.
Bocom International’s liquidity ratio was 1.4 times in 2016, above the market average of 1.3 times.
The company is engaged in capital market financing, financial advisory, brokerage and asset management businesses.
“We are confident in the company’s future growth,” said Tan Yueheng, chairman and executive director of Bocom International. “We are the first banking sector related securities company to be listed.”
He added they were a locally incorporated Hong Kong company, which differs from other securities firms that have listed in Hong Kong as H share companies.
Market response to recent IPOs have been modest after the Hong Kong Exchange and Clearing stepped up its quality control on listed companies to avoid the speculative IPOs that took place last year, and investors are expecting smaller share price gains on debut trading, especially for companies with small market capitalisation.
Hong Kong was ranked as the world’s largest IPO market last year, raising US$39.4 billion through IPOs, share placements, rights issues and other offerings, according to data from Thomson Reuters.
Bocom aside, several firms in the financial sector have also submitted applications to the Hong Kong stock exchange for a public listing.
Public information from the HKEx shows that China’s Henan-based Zhongyuan Bank Co., Ltd. and Guangzhou Rural Commercial Bank Co. have both submitted IPO application.
Each plans to raise about US$1 billion, reported IFR which quoted market sources as saying in April.
Sources said Bank of Jiujiang, a lender in eastern China’s Jiangxi province, is planning an initial public offering in Hong Kong in the second half of this year.
In April, Guotai Junan Securities, one of the biggest mainland based brokerage companies raised more than HK$16 billion from its public offer in Hong Kong, making it the second-largest IPO in Hong Kong, after the Postal Savings Bank of China which raised US$7.4 billion.
Hong Kong media reports said that Zhongan Online P&C Insurance Co is also planning a HK listing in the third quarter of the year. Zhongan is backed by Ant Financial, owner of Alipay, and Tencent Holdings.
