HK online brokerage Futu raises US$1.24bil to cash in on margin lending boom

HONG KONG: Hong Kong-based online brokerage Futu Holdings Ltd has raised $1.24 billion by selling new shares at $130 a piece to help expand its margin financing business, two people with direct knowledge of the matter told Reuters.

The price was set on Wednesday in Hong Kong, the people said, after the stock collapsed 23.4% in New York Tuesday trade as investors digested the deal.

The people declined to be identified as the information was not public. Futu declined to comment.

Futu previously said it would sell 9.5 million American Depository Shares (ADRs) and spend the proceeds on increasing its margin financing capability, international expansion and new licence applications.

Margin lending, or the amount brokers can lend to individual investors to buy shares, has been a big business in Hong Kong in recent years as a large number of equity floats lured retail buyers.

The most recent data from the Securities and Futures Commission (SFC) showed there were 1.5 million active margin investors in Hong Kong at the end of 2020, up 144% from a year earlier.

Futu's shares were trading at $177.92 before the deal, which would have raised Futu about $1.7 billion had the shares priced around that level.

However, the 23.4% plunge on Tuesday followed a 16% climb on Monday, which dampened the price investors were willing to pay for new stock.

The capital raising was Futu's third in less than two years and Citi analysts estimated the deal would be 3.3% dilutive for Futu's earnings per ADS.

Futu, backed by Chinese gaming and social media leader Tencent Holdings Ltd, listed on the New York exchange in 2019. - Reuters

Article type: metered
User Type: anonymous web
User Status:
Campaign ID: 46
Cxense type: free
User access status: 3

Futu , Tencent , Margin lending


Next In Business News

Human error and shaky grid spark new global-chip supply concerns
Grab’s SPAC vehicle Altimeter near record low
Singapore stocks tumble as strict virus curbs return
Foxconn sees 2Q surge on WFH boom
Ant leapfrogs banks to top China fund sale rankings
Wider vaccination and herd immunity are vital to the recovery
Oil extends loss on India Covid-19 cases, U.S. pipeline restart
Stocks rebound as Fed officials calm inflation fears, for now
Japan Q2 economic growth forecasts cut sharply on coronavirus restrictions
Subang Airport car park upgrading to complete by 3Q, 200 extra parking bays

Stories You'll Enjoy