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Huatai restructures in preparation for IPO
Huatai Securities Co has changed its structure into a shareholding firm to prepare for an initial public offering.
Jiangsu Hongtu High Technology Co, one of Huatai’s shareholders, said in a statement filed to the Shanghai Stock Exchange yesterday that Huatai has approved the restructuring plan.
The restructured brokerage will issue 4.5 billion shares, valued at 4.5 billion yuan (600 million U.S. dollars), or one yuan each, said the statement. It also said Huatai is waiting for regulatory approval for its plans to take over 80.12 percent of Xintai Securities Co.
"Huatai is on the track to go public under a rule that has been relaxed to support the growth of domestic brokers to fend off competition from foreign peers," said Dai Ming, an analyst with Kingsun Investment Management Co.
According to Shanghai Securities News, Huatai expects to start floating shares in the first quarter of 2008 despite posting a loss in 2005, citing Huatai sources who wished to remain anonymous.
Before the rule was eased, China’s stock regulator required an IPO applicant to be profitable for three consecutive years.
To sidestep the rule, Haitong Securities Co, Guoyuan Securities Co and Northeast Securities Co undertook a "back-door" listing by taking over other publicly-traded companies.
"But back-door listings may be vulnerable to risks such as insider trading, and the regulator prefers IPO based on recent good performances of brokers," said Da i.
Earlier this year, Huatai issued a notice to quell market speculation that it would seek a back-door listing.
Huatai insisted it would expand by encouraging existing shareholders to boost their stakes as well as attract new strategic investors.
Last year, Huatai entered the Hong Kong market by buying 49 percent in Great Wall Futures Brokerage Co.
Jiangsu Province-based Huatai was set up in May 1991 with a registered capital of 10 million yuan and boosted that to 2.2 billion yuan by the end of last year.
Jiangsu Hongtu High Technology Co, one of Huatai’s shareholders, said in a statement filed to the Shanghai Stock Exchange yesterday that Huatai has approved the restructuring plan.
The restructured brokerage will issue 4.5 billion shares, valued at 4.5 billion yuan (600 million U.S. dollars), or one yuan each, said the statement. It also said Huatai is waiting for regulatory approval for its plans to take over 80.12 percent of Xintai Securities Co.
"Huatai is on the track to go public under a rule that has been relaxed to support the growth of domestic brokers to fend off competition from foreign peers," said Dai Ming, an analyst with Kingsun Investment Management Co.
According to Shanghai Securities News, Huatai expects to start floating shares in the first quarter of 2008 despite posting a loss in 2005, citing Huatai sources who wished to remain anonymous.
Before the rule was eased, China’s stock regulator required an IPO applicant to be profitable for three consecutive years.
To sidestep the rule, Haitong Securities Co, Guoyuan Securities Co and Northeast Securities Co undertook a "back-door" listing by taking over other publicly-traded companies.
"But back-door listings may be vulnerable to risks such as insider trading, and the regulator prefers IPO based on recent good performances of brokers," said Da i.
Earlier this year, Huatai issued a notice to quell market speculation that it would seek a back-door listing.
Huatai insisted it would expand by encouraging existing shareholders to boost their stakes as well as attract new strategic investors.
Last year, Huatai entered the Hong Kong market by buying 49 percent in Great Wall Futures Brokerage Co.
Jiangsu Province-based Huatai was set up in May 1991 with a registered capital of 10 million yuan and boosted that to 2.2 billion yuan by the end of last year.
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