China Securities Finance Launches $1.1bn Hong Kong IPO Next Monday

Chinese brokerage China Securities Finance Co Ltd plans to raise about $1.1 billion in an initial public offering on the Hong Kong Stock Exchange to help fund its growth expansion among other things, marking one of the region’s largest IPOs of 2016. The company plans to price its offering next Monday, making CSF the fourth mainland brokerage to go public this year, according to a Thomson Reuters publication on Thursday.

CSF said it plans to issue 1.13 billion shares priced between HK$6.36 and HK$7.26 (US$ 0.81 and US$0.93) each, raising HK$8.2 billion ($1.06 billion) if the share price went at the range midpoint.

Founded by China’s major commodities and securities exchanges, China Securities Finance Corp (CSF), which is partly owned by the country’s top brokerage CITIC Securities Co, is a quasi-government agency that provides funds to brokers.

China Securities Finance said it will use proceeds to fund an array of growth plans, including supporting its wealth management, expanding its securities trading business and pursuing overseas expansion through potential acquisitions.

Although the company hopes thath a successful float will help restore momentum for their businesses, which took a hit last year when the Chinese stock market plummeted, the securities firm’s IPO is unlikely to gain much traction, given the current sluggish market sentiment, at least compared to previous offerings which floated while Chinese stock markets were at their peak.

Earnings of Chinese brokerages have fallen off a cliff this year because trading turnover has shrunk sharply. Trading volumes both in Hong Kong and the mainland have since continued at low levels.

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