CHINA'S Everbright Securities Co has won shareholder approval to issue up to 520 million yuan-backed shares in Shanghai, according to its Hong Kong-listed parent.
The broker's initial public offering is now subject to formal regulatory approval and will also depend on the situation of the Chinese mainland securities market, China Everbright Ltd said in a statement late Monday.
The proceeds derived from the IPO will be fully used to shore up working capital of Shanghai-based Everbright Securities, according to the statement, without giving further listing details.
Stake cut
China Everbright, which owns 39.31 percent of the brokerage unit, said its stake in the securities house will be cut to no higher than 33.33 percent after the IPO, the statement said.
Everbright Securities, which has a registered capital of 2.898 billion yuan (US$383 million), in July started formal preparatory work for its IPO by appointing Orient Securities Co as its underwriter.
The broker said early this year that it would revise 2004 earnings to comply with regulatory requirements that it show three straight years of profit before selling shares publicly.
Everbright Securities said in early July that its 2007 first-half pre-tax profit jumped by nine-fold to 3.247 billion yuan on revenue of 4.658 billion yuan, up 553 percent from the same period last year.
"Based on its rosy profit growth, the company can easily raise between 20 billion yuan and 30 billion yuan in its IPO amid strong sentiment," said Lu Zhenming, an investment consultant at Galaxy Securities.
China's stock watchdog is urging its financially healthier brokers to seek public listings for funds to expand before the domestic market is fully deregulated to overseas financial giants. Haitong Securities Co and Northeast Securities Co have listed through back-door issues this year.