Money

China regulator approves Industrial Securities IPO

(Agencies)
Updated: 2010-06-26 15:12

SHANGHAI: China's securities regulator has approved Industrial Securities for a Shanghai listing likely to raise roughly $500 million, adding the mid-sized brokerage to the long list of financial companies raising funds.

Based in southern Fujian province, the brokerage said earlier this month it hoped to issue up to 263 million yuan-denominated A-shares, accounting for up to 12 percent of its expanded capital base.

The listing approval was posted on the China Securities Regulatory Commission's website on Saturday.

Industrial Securities' IPO comes after a glut of fundraisings by Chinese banks and brokerages, in the case of the banks prompted by a lending spree last year which depleted their capital bases.

The brokerage will use the additional capital to open new securities trading outlets, expand its banking business and boost the operations of its futures subsidiary.

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State media said late last year Industrial Securities was planning to raise about 6 billion yuan but given its earnings last year and weaker market conditions since, that figure looks overly optimistic.

The brokerage earned 0.6 yuan per share in 2009. Given that Chinese brokerages are mostly valued at around 23 times historical earnings on the secondary market, it is more likely to raise somewhere around 3.6 billion yuan.

The mid-sized IPO will be a further gauge of appetite among investors towards Chinese financial institutions, as the mammoth Hong Kong and Shanghai IPO of Agricultural Bank of China looms on the horizon.

The last of the "Big Four" state lenders to go public could pull off the world's biggest IPO ever, at around $24.5 billion, if it elicits enough investor interest to prompt it to exercise the overallotment option.