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BIZCHINA> Top Biz News
China Merchants Securities to launch IPO this week
(Agencies)
Updated: 2009-11-03 14:05

Merchants Securities plans to sell up to 360 million yuan-denominated A shares, or 10 percent of its expanded capital after the IPO, it said in a share sale prospectus on Tuesday.

It will use the proceeds to supplement operational capital, including expansion in asset management, investment banking, private equity investment, brokerage and proprietary businesses.

Several Chinese brokerages, including Huatai Securities and Industrial Securities, are considering IPOs in order to expand.

China has 10 listed brokerages but only two, CITIC and Everbright Securities, went public by floating IPO shares. Most of the others chose to list via acquisitions of listed companies.

Merchants Securities will start consulting investors on pricing the offer on Wednesday through the bookbuilding process. It will take institutional subscriptions on Nov 9 and retail subscriptions on Nov 10, its prospectus said.

Twenty percent of the shares on offer will be earmarked for institutions and the rest for retail investors. The ratio may be shifted in favour of either side to reflect demand.

The company said it hoped to list on the Shanghai Stock Exchange as soon as possible after the IPO.

Related readings:
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China Merchants Securities to launch IPO this week First batch of 28 firms start trading on ChiNext
China Merchants Securities to launch IPO this week Everbright, Merchants Securities fare well
China Merchants Securities to launch IPO this week Merchants Securities applies for IPO

Merchants Securities said its 2008 earnings, fully diluted to reflect the expanded equity base after the IPO, were 0.56 yuan per share. With an IPO price of 50 times its 2008 earnings, its Shanghai IPO could raise slightly more than 10 billion yuan.

The average historical price earnings (PE) ratio of China's 10 listed brokerages is 45 times, according to Reuters Research, but China's IPOs are now typically set at higher PE ratios due in part to strong investor interest in new shares.

Everbright Securities, which raised 11 billion yuan in its August Shanghai IPO, set its IPO price at 59 times 2008 earnings.

Merchants Securities reported net profit of 1.46 billion yuan in the first six months of this year compared with 2.11 billion yuan for all of 2008. It gave no six-month comparison.

Shenzhen-based Merchants Securities, controlled by port-to-property conglomerate China Merchants Group, has appointed Goldman Sachs Gaohua Securities, the Wall Street bank's mainland China joint venture, and Swiss bank UBS as its IPO's lead underwriters.


(For more biz stories, please visit Industries)

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