Broker Guotai Junan soars in debut after China's biggest IPO since 2010

SHANGHAI: Shares in Guotai Junan Securities Co, China's third biggest brokerage, jumped 44% in their Shanghai debut today after it raised 30.1 billion yuan (US$4.9 billion) in the country's largest initial public offering in five years.

The feverish demand for the stock reflects a bull-run for the country's share markets that has seen the CSI300 index of the largest listed companies in Shanghai and Shenzhen nearly double in value since November when the central bank cut interest rates to support a slowing economy.

The IPO, in which 20% of the brokerage's stock come to market through the issue of new shares, attracted huge demand, freezing up 2.35 trillion yuan (US$380 billion) of capital during its subscription period. Chinese stock investors need to put up some money to join a lottery system to buy IPO shares, which locks up those funds.

Shares in state-controlled Guotai Junan soared to 28.38 yuan this morning, compared with their IPO price of 19.71 yuan - up by the maximum 44% that is allowed for stocks on their debut. The jump came despite a slide over the last two weeks for Chinese shares triggered by fresh government moves to tighten rules for margin financing.

Other Chinese brokerages which have rushed to tap markets on the back of rallying stocks include Shanghai-listed Huatai Securities Co Ltd, which saw its Hong Kong share offering raise US$4.5 billion.

Guotai Junan plans to use the funds to expand the financial services it provides, improve its underwriting capabilities and broaden its asset management business.

China Galaxy Securities Co Ltd, Huarong Securities Co Ltd, Ping An Securities Ltd, Huatai United Securities Co Ltd and Southwest Securities Co Ltd were underwriters for the IPO, according to the prospectus.

Guotai Junan's IPO was China's largest since the Agricultural Bank of China Ltd raised around US$11 billion in Shanghai and another US$11 billion in Hong Kong through a dual listing in 2010. - Reuters
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