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Haitong plans US$3.9b private placement in HK

Haitong Securities, China’s second largest brokerage by market value, said it plans to raise HK$29.9 billion (US$ 3.9 billion) in a private share placement in Hong Kong, aiming to bolster capital under a stock market boom.

The company will sell 1.92 billion additional Hong Kong-listed shares at HK$15.62 each to seven investors including New China Investment Management Co and TD Ameritrade Special Holdings. Hedge fund Marshall Wace LLP is also among the other buyers.

“It’s the golden period for brokerages to raise funds under a bull run,” said Li Bo, a Shanghai-based investment consultant at Guangfa Securities Co. “There’s a high possibility for other counterparts to unveil similar plans in a sizeable way.”

The fundraising was carried out under the backdrop that a soaring stock market and an expansion in margin financing boost China’s brokerages. Stock trading volumes have surged to a record high after a surprise cut in China’s interest rate last month and the launch of Shanghai Hong Kong Stock Connect, which allows investors to trade directly on each other’s bourse.

Haitong will use about 60 percent of the proceeds to develop its short-selling and margin-financing business and about 10 percent to replenish its working capital, it said.

Haitong's H-shares hit a high of HK$23.20 on December 9. Its shares closed at HK$18.2 on Monday, up nearly 36 percent this year, compared with a 1 percent decline on the benchmark Hang Seng Index.



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