By Pamela Barbaglia
LONDON (Reuters) – Huatai Securities has priced its London stock market listing at $20.50 per global depositary receipt (GDR), at the bottom of its indicated price range, in a deal that will help it to raise at least $1.5 billion, the company said on Friday.
Huatai, one of China’s largest brokerages, is expected to make its London market debut on June 17, becoming the first company to trade using the long-awaited London-Shanghai stock connect project.
Its listing on the London Stock Exchange will coincide with Britain and China holding the next round of their Economic and Financial Dialogue (EFD), with Chinese Vice Premier Hu Chunhua leading a Chinese delegation to London on Monday.
Huatai sold 75 million GDRs, representing 9.1% of its outstanding share capital.
The company will also make available an additional 7.5 million GDRs through an over-allotment, or greenshoe, option which if exercised in full would help it raise up to $1.7 billion, representing 82.5 million GDRs in total or 10% of the group’s capital.
Huatai, which has a range of businesses including brokerage, wealth management and investment banking, had targeted a price range of $20 to $24.50 per GDR.
Huatai’s chairman Zhou Yi said the deal “opens a gateway for international investors to share in the rapid development of China’s financial services market”.
Huatai is valued at around $21 billion through its Shanghai and Hong Kong listings, with the likes of BlackRock and Vanguard among its top investors in Asia.
A source close to the GDR sale said that the biggest orders were placed by hedge funds while other investors were more cautious.
The listing, which was initially planned in December, has faced a long delay due to uncertainty about how China’s government would treat any currency conversion back into yuan, sources said.
On May 27 China’s forex regulator published cross-border capital management rules on depository receipts (DRs), paving the way to Huatai’s London listing.
Other Chinese firms are expected to pursue similar listings in London but several banking sources cautioned it may take time to educate investors.
“This is a deal where investors had done the due diligence already back in December, so there was not a whole lot of market education needed,” said the source close to the deal.
JPMorgan, Huatai Financial Holdings and Morgan Stanley are leading the GDR sale as joint global co-ordinators and joint bookrunners, while Credit Suisse and HSBC are acting as joint bookrunners.
(Reporting by Pamela Barbaglia, additional reporting by Abhinav Ramnarayan.; Editing by David Goodman and Jan Harvey)