CHANGJIANG Securities Co will start trading shares next Thursday after it took over Shenzhen-listed Shijiazhuang Refining-Chemical Co Ltd via a back-door listing, a statement filed to the Shenzhen Stock Exchange said yesterday.
It becomes the latest among a group of domestic brokers, including Haitong Securities Co, Guoyuan Securities Co and Northeast Securities Co, to tap public funds for growth.
Shijiazhuang Refining-Chemical Co Ltd is allowed to issue 1.44 billion new shares to existing shareholders of Changjiang Securities in exchange for the stakes they hold with the broker.
The move will be completed next Tuesday and, two days later, shares of the refinery will be renamed Changjiang Securities as a listed firm and resume trading on the Shenzhen Stock Exchange.
As part of the deal, Shijiazhuang Refining-Chemical will sell all assets and liabilities to its parent company China Petroleum & Chemical Corp.
"It is important for domestic brokers to go public, given the fiercer competition with more foreign participation," said Zhang Qi, an analyst with Haitong Securities Co. "Changjiang Securities may see its edges sharpened after it absorbs more capital from the market."
Other brokers such as Huatai Securities, Orient Securities, Western Securities and Merchants Securities are busy preparing for their initial public offerings as China encourages brokerage firms to sell shares.
China Securities Regulatory Commission used to require an IPO applicant to be profitable for three consecutive years. But it eased the rules after brokers gave fabulous performances. IPO is preferred to counter the risks such as insider trading brought by back-door listing practices.