Economy

Markets

Industries

Insights

Reports

Events

Guotai Jun'an prepares IPO

(Shanghai Daily)
Updated: 2007-04-23 14:51

Guotai Jun'an Securities Co is planning to launch an initial public offering (IPO) in Shanghai this year as the giant broker hopes to raise funds for expansion amid an industry revamp, sources said yesterday.

The Shanghai-based brokerage has hired PricewaterhouseCoopers as its IPO auditor, according to people familiar with the matter. The broker is qualified for the listing as it has logged profits for three years in a row, the sources said.

The fundraising target has not been finalized.

If the plan wins regulatory approval, Guotai Jun'an would be the third mainland broker to sell shares through an IPO after Shenzhen-listed Hongyuan Securities Co and Shanghai-traded CITIC Securities Co.

Guotai Jun'an is in talks with several securities firms to underwrite its Shanghai listing, according to the sources. Officials at the broker were not available for comment yesterday.

Chinese securities authorities are urging healthier and bigger brokers to pursue public listings to shore up capital before fully opening the lucrative industry to overseas competition.

The China Securities Regulatory Commission has set an August deadline for mainland securities companies to restructure via mergers and acquisitions as it hopes to halve the number of industry participants to about 50.

Nearly a dozen domestic brokers, including Everbright Securities Co and Haitong Securities Co, unveiled plans this year to seek IPOs or conduct back-door listings by acquiring traded firms. But none has received final regulatory approval for a stock issue.

Guotai Jun'an, China's No 2 broker by 2006 stock trading value, is placing additional shares in itself and its investment vehicle with existing shareholders, possibly raising a combined 3.4 billion yuan (US$440 million), sources said earlier.

The Shanghai municipal government owns about 24 percent of Guotai Jun'an through an asset-management firm while Central Huijin, a central bank arm, controls 21 percent of the broker.

The two big shareholders will likely maintain their stakes after the capital injection, according to the sources. The Shanghai government wants Guotai Jun'an to take over smaller city rival Shanghai Securities Co, but a deal has yet to be concluded, they said.