China Investment Fund surges by 22 per cent in Hong Kong on new share placement

Shares in China Investment Fund International Holdings skyrocketed on Monday, rising by 22 per cent, after it said it was placing new shares to raise HK$200 million (US$25 million) for investment in listed and unlisted securities. Its stock was also boosted by expectations that it would be included in the Shenzhen Stock Connect with Hong Kong.

China Investment Fund traded at HK$15.74, about 509 per cent higher in one year.

The placing of up to 19 million new shares at HK$10.525 each represents an 18.41 per cent discount on Friday’s closing price of HK$12.90. The placement will also represent about 1.56 per cent of the company’s existing share capital, according to a stock exchange filing made after markets closed on Friday.

The fundraising, the company’s first such activity in at least 12 months, will help it to strengthen its capital base and improve its financial position for investing.

“The directors also take the view that the net proceeds from the placing will enable the group to scale its investment portfolio promptly and efficiently, to capture and benefit from fast-changing investment sentiments,” Luk Hong Man, the company’s chief executive and financial controller, said in a statement.

An application for the placing will be made to the stock exchange for approval. Following the completion of formalities, China Investment Fund’s new shareholding structure will lead to a decrease in shares held by chairman Sui Guangyi to 12.09 per cent from 12.28 per cent.

The stake held by HK DYF International Holding Group will fall to 16.01 per cent from 16.26 per cent. HK DYF is 74.55 per cent owned by Shenzhen Ding Yi Feng Assets Management, which is in turn 29.39 per cent held by Sui.

KGI Asia is the placing agent.

The company reported a profit of HK$6 million for the six months ending June 30, compared with a loss of HK$65 million for the same period last year. The company has reported losses for seven straight years.

China Investment Fund said the losses were made “mainly due to the unrealised net loss of financial assets, the settlement of futures contracts and the loss of disposal subsidiaries”.

But it is expected the company will be included in the list of firms traded through the Hong Kong and Shenzhen Stock Connect. Its average market valuation was more than HK$5 billion in the past year and it is a constituent of the Hang Seng Composite Small Cap Index.

In November, China Investment Fund was also included in MSCI’s World Small Cap Index, which captures small cap representation across 23 developed countries.

The fund invests in information technology, telecommunications, manufacturing, pharmaceutical, real estate, infrastructure and life insurance.