Money

GF Securities plans $2.65b share placement

(Agencies)
Updated: 2010-08-03 15:23

GF Securities, China's No 4 brokerage by market capitalization, said on Tuesday it plans to raise up to $2.65 billion in a private share placement to help it expand core businesses including underwriting share issues.

The share placement, which aims to raise 18 billion yuan ($2.66 billion), comes at a time when a slew of Chinese financial firms are tapping markets for funds to fuel growth as the equities markets start to recover from months in the doldrums.

China's top two banks - Industrial and Commercial Bank of China and China Construction Bank (CCB) - have both recently sped up their efforts to raise funds after a massive dual listing by rival Agricultural Bank of China last month, replenishing their capital after a lending binge in 2009.

CCB, the world's second-biggest lender by market value, is trying to complete its fundraising in the beginning of the fourth quarter, according to two sources with direct knowledge of the matter.

Chinese financial markets have improved in the second half of the year, with the Shanghai Composite Index and the Hang Seng Index climbing 10 percent and 4.5 percent in July, respectively.

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Guangzhou-based GF Securities' share placement will be the first such move since the firm started trading in Shenzhen in February this year via a back-door listing after merging with Yanbian Road.

The firm has 223 outlets across China, ranking the third in terms of branches.

GF Securities, which has a market capitalization of $12.2 billion, plans to issue 600 million additional shares to up to 10 investors, it said in a filing to the Shenzhen Stock Exchange.

"A private placement would usually have little impact on the broad market," said Wang Mingfei, an analyst with Orient Securities.

"However, an improving capital market will certainly help boost investor sentiment," he said.

The firm also said in the statement that it wishes to expand businesses such as investment banking, margin trading and short selling, optimize trading offices and develop new sales outlets.