BEIJING Capital Group Ltd, a key state investment arm, is selling a 13.81-percent stake in First Capital Securities Co to pave the way for a public listing of another subsidiary.
Beijing Capital plans to dispose of 747 million shares in Beijing-based First Capital through an auction on the Beijing Equity Exchange, according to a corporate statement to the bourse.
The floor price will be set at 1.50 yuan (20 US cents) per share, compared with 1.15 yuan in net assets per share at First Capital at the end of last year, the statement said. After the sale, Beijing Capital's stake in the broker will be cut to 33.46 percent.
Beijing Capital, the municipality's investment vehicle, also controls Capital Securities Co, which is hoping to conduct a backdoor listing by taking over an existing publicly traded firm.
China's stock market regulator prohibits a parent company from owning a controlling stake in a non-public subsidiary that has direct business competition with a listed subsidiary.
"Beijing Capital should either merge the two brokers or sell its stake in First Capital in order to help Capital Securities go public," said Zheng Wei, a Zhongtian Investment Consulting Co analyst.
Zheng expects Beijing Capital to sell more of its stake in First Capital so it won't be its biggest shareholder. Two other firms each own 4.68-percent stakes in the No. 2 slot.
Capital Securities, 46 percent held by Beijing Capital, has been seeking regulatory approval since January to take over Shanghai-listed Chengdu Qianfeng Electronics Co to achieve a backdoor listing.