Stocks News
- Orient Securities plans listing for expansion
Date: 16-Oct-2007 Sources: (Shenzhen Daily)
ORIENT Securities Co., China's eighth-largest brokerage by profits, has applied to raise about US$4 billion in an A-share initial public offering (IPO) as early as this year, taking advantage of a bullish market to fund its rapid expansion, sources said yesterday.
The company plans to issue as many as 1.5 billion shares, or 31 percent of its enlarged capital, on the Shanghai bourse in a move aimed to raise about 30 billion yuan (US$4 billion), said the sources, who have been briefed on its IPO proposal.
'After the IPO, Orient Securities will expand through mergers and acquisitions, and will enter new business areas,'said one of the sources, who declined to be identified.
The company's net profits are expected to reach 4 billion yuan in 2007, the sources said. The Shanghai-based company posted net profit of 2.18 billion yuan for the first half of this year, versus 1.42 billion for the whole of 2006.
Major shareholders of Orient Securities, established in 1998, include some of Shanghai's State-owned firms such as parent company of Shenergy Co., top retailer Bailian Group and Shanghai Construction.
Orient Securities now operates about 60 branches in 20 cities after it acquired troubled Northern Securities in a government-backed deal in 2005. Orient Securities also controls China Universal Asset Management Co. with a 47 percent stake as one of its three founding shareholders.
Everbright Securities Co., also based in Shanghai, will be Orient Securities' IPO underwriter.
Officials at both Orient Securities and Everbright Securities declined to comment.
Orient Securities has also applied to securities regulator for a business license which can allow the firm to help domestic clients to invest abroad under the Qualified Domestic Institutional Investor program, the sources said.
The government has spent more than two years cleaning up its brokerage sector, which has rebounded strongly since late 2005 when the A-share market began a massive bull-run.
Regulators are now encouraging major brokers to list to bolster capital and improve corporate governance after regulators spent more than two years revamping the industry, once in deep financial trouble.
Foreign banks including HSBC Holdings Plc., Citigroup Inc. and Morgan Stanley are also looking for Chinese brokerage partners as they seek to share in the fast growth of China's capital markets.
At least a dozen Chinese securities firms, including Merchants, Everbright and Guotai Junan Securities, have said they are planning to list domestically in the near future to cash in on surging valuations among China's brokerages.
Shares of China's four listed brokerages, CITIC, Hong Yuan, Haitong and Northeast Securities have soared as the firms benefit from swelling trading turnover and underwriting fees from China's booming IPO market.
'It's a clear industry trend, not just for Orient Securities,'said another of the sources.
'Everyone is raising money as they know the next thing to happen after IPOs must be industry consolidation,'he said, adding that Orient Securities has been searching for potential smaller rivals for acquisitions.
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