Enticing

27 March 2017 By Lisa Jucca Follow @LJucca

Guotai Junan Securities is selling Hong Kong stock at a 25 pct markdown versus its mainland shares. That should be enough to entice buyers to the $2.1 bln offer. Investors would purchase one of China’s strongest brokers, and at a bigger discount than the wider sector.

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Chinese broker Guotai Junan Securities is set to raise $2.1 billion in a fixed-price share offering in Hong Kong, IFR reported on March 26, citing people familiar with the plans. The Shanghai-listed company plans to sell slightly more than 1 billion shares at HK$15.85 each, according to IFR, a Thomson Reuters publication.

This would be the largest stock sale in the Asian financial centre since the $7.6 billion initial public offering of Postal Savings Bank of China in September. The offer kicks off on March 27, with pricing slated for March 31, IFR said.

Guotai Junan’s Hong Kong IPO price represents a discount of about 25 percent to Guotai Junan's Shanghai-listed shares, which closed at 18.79 yuan on March 24. The firm went public in China in June 2015, raising nearly $5 billion in what is still the largest mainland listing since 2010.

Guotai Junan has secured about $600 million in commitment from cornerstone investors, IFR reported.

The Chinese broker said in its listing document it ranked second in the industry by operating revenue and net profit in 2016. Average return on net assets from 2007 to 2016 was 18.8 percent, above the industry average of 14.7 percent, it said.

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