Haitong Securities Expands IPO
HONG KONG—Haitong Securities Co. 600837.SH +2.38% has increased the number of shares it will sell through a Hong Kong listing, boosting the potential size of its initial public offering to US$1.77 billion from around US$1.5 billion, a sign that companies are seeking to capitalize on stronger stock markets.
Haitong is the second Chinese brokerage firm to seek a Hong Kong listing; Citic Securities Co. had a US$1.7 billion IPO in October. If the Haitong deal goes through, it would be the biggest IPO this year. The current leader is a US$1.22 billion offering by the Dutch cable network Ziggo NV in March.
The brokerage, whose yuan-denominated shares trade in Shanghai, plans to start taking orders from institutional investors Tuesday, the person said.
It plans to sell 1.23 billion shares at 10.48 Hong Kong dollars to 11.18 Hong Kong dollars (US$1.35 to US$1.44) each, the person said. That would put the maximum deal size at HK$13.75 billion. Shares are expected to start trading April 27.
Haitong, China’s second-largest brokerage by total assets after Citic Securities, earlier planned to raise around US$1.5 billion in a Hong Kong IPO by selling one billion shares, other people familiar with the situation said Thursday.
Much of the deal is expected to be secured by cornerstone investments. Cornerstone investors, who are guaranteed large allotments in an IPO in exchange for agreeing to hold the shares a certain length of time, are seen as a way to bring in other investors.
A list of those buyers will be released Tuesday.
Haitong had first sought to sell shares late last year and had gotten as far as taking orders from investors before canceling the deal in the face of volatile markets.
Sentiment toward stocks has since firmed; the Shanghai Composite Index has climbed 7.3% this year and Hong Kong’s Hang Seng Index has jumped 12.3%. Last year the Shanghai Composite fell 22% and the Hang Seng Index slumped 20%.
However, investors remain wary of new listings. Around 71% of the 38 companies that listed in Hong Kong since 2011 and raised over US$100 million are trading below their issue prices, according to FactSet.
Haitong is seeking to raise more money this time. Last year, it offered 1.2294 billion shares in a price range of HK$9.38 to HK$10.58, for a deal potentially worth HK$13.01 billion, according to the company’s listing prospectus.
Haitong’s share sale last year was one of the four biggest Asia IPOs to be canceled or postponed in 2011, according to Dealogic. The other three were Shanghai-listed China Everbright Bank Co., which had sought to raise US$6 billion in Hong Kong; Australian coal and iron-ore miner Resourcehouse Ltd., which wanted to raise US$3.6 billion, also in Hong Kong; and Shanghai-listed construction-machinery company Sany Heavy Industry Co. Ltd., 600031.SH +0.07% which planned an IPO of up to US$3.3 billion, also in Hong Kong.