China Merchants Securities and Everbright Securities have applied to securities regulators for approval to launch initial public offerings, competing to become the first domestic brokers to list via an IPO in four years, sources said today.
Everbright Securities submitted its application late Tuesday while Merchants Securities handed in its stock-sale proposal earlier this month, according to people familiar with the matter.
Both brokers hope to launch IPOs by the end of this year to ride the current bullish market sentiment, the sources said. Officials at the securities firms and the stock watchdog were not available to comment today.
"Brokers with healthy financial fundamentals all desire to sell shares publicly as soon as possible,'' said a Shanghai-based securities source. "They not only want to raise more money but also hope a public listing can help win regulatory support for their future business expansion.''
Merchants Securities charted 2007 half-year net profits of 2.4 billion yuan (US$320 million), compared with 1.1 billion yuan in net earnings for all of last year. It has total assets worth 19.6 billion yuan and 52 outlets nationwide.
The Shenzhen-based brokerage is expected to sell shares on the Shenzhen stock exchange and may raise between six billion yuan and 10 billion yuan, sources said earlier.
Everbright Securities late last month won shareholder approval to float up to 520 million shares in Shanghai in an issue analysts believe can raise at least 15 billion yuan.
The Shanghai-based broker said in early July that its 2007 first-half pre-tax profit jumped nine-fold to 3.25 billion yuan on revenue of 4.66 billion yuan, up 553 percent from the same period last year.
"More brokers are set to submit their IPOs proposals by the end of the year,'' said a second brokerage source. ``The market watchdog definitely favors bolstering larger brokerages by making them public.''
Chinese stock regulator has been encouraging bigger brokerages to tap public funding for capital to expand and to shore up corporate governance before the sector is fully deregulated to foreign competition.
The mainland stock market now hosts four publicly traded brokers, among which Haitong Securities and Northeast Securities went public via back-door issuances this year.
Hong Yuan Securities Co and Citic Securities Co listed through IPOs in 1994 and 2003, respectively.
A raft of stock houses including Guotai Jun'an Securities, Orient Securities, Huatai Securities and Galaxy Securities are also on track to pursue their domestic IPOs, sources have said.
(Shanghai Daily September 26, 2007)
