HONG KONG—China International Capital Corp., one of China's top
investment banks, is planning to raise US$1 billion in an initial
public offering in Hong Kong as early as October, people familiar
with the situation said, offering big shareholders KKR & Co.
and TPG Capital the chance to exit their investment, despite the
recent turmoil in Chinese stock markets.
Beijing-based CICC, which made its name advising Chinese
state-owned firms that have gone public in Hong Kong over the past
decade, plans to submit an application to Hong Kong's stock
exchange seeking approval for the listing in the coming weeks,
people with direct knowledge of the deal said Monday. In Hong Kong,
companies that want to list need to first get approval from the
city's stock exchange.
CICC was formed in 1995 by Morgan Stanley and China Construction
Bank Corp. as China's first Sino-foreign joint-venture investment
bank. Morgan Stanley sold its stake in December 2010 to a
consortium that included sovereign-wealth fund Government of
Singapore Investment Corp., Great Eastern Holdings Ltd., the
insurer controlled by Oversea-Chinese Banking Corp., and
private-equity firms KKR & Co. and TPG Capital.
Central Huijin Investment Ltd., the domestic investment arm of
China's sovereign-wealth fund, is the largest shareholder in CICC
with a 43.35% stake. Singapore's GIC holds 16.35%, while TPG
Capital owns 10.3% and KKR holds 10%, according to its 2014 annual
report. CICC has offices in Hong Kong, New York, London and
Singapore.
CICC has played a key role in advising the Chinese government on
state-owned enterprise reform and guiding the listing of the
country's major overseas IPOs.
Still, the Chinese investment bank hasn't quite lived up to its
potential. The company's management, led by former Chief Executive
Levin Zhu for years, was slow to move into the profitable brokerage
business, preferring to stick to underwriting share offerings. That
paved the way for competitors such as Citic Securities Co. to
become bigger and more diversified than CICC.
In March, the Chinese government tapped Bi Mingjian to become
the Chinese investment bank's chief executive. Mr. Bi returned to
CICC after a stint at Chinese private-equity firm Hopu Investment
Management Co. He succeeded Mr. Zhu, the son of former Chinese
Premier Zhu Rongji.
If it goes public, the investment bank will follow several other
Chinese brokerages to list in Hong Kong this year. Guolian
Securities Co., the joint-venture partner of Royal Bank of Scotland
Group PLC in China, raised US$457 million in June, and the US$4.99
billion listing by China brokerage firm HTSC, better-known as
Huatai Securities, in May, was the world's largest listing so far
this year, according to data provider Dealogic.
The share performance of three recently listed Chinese
brokerages—Guolian, Huatai and GF Securities Co., which raised
US$4.1 billion in March, has been disappointing amid concerns a
steep decline in China's equity markets would curb their
profitability. Last week, 21 Chinese brokers vowed to invest no
less than 120 billion yuan (19 billion dollars) to increase their
investments in the stock market until the Shanghai Composite rises
to 4500. Monday it was trading just under the 4000 mark.
Guolian Securities has fallen 50% since its listing, leaving
cornerstone investors including China Life Franklin Asset
Management Co. and Chinese private-equity firm Citic Capital GL
heavily in the red.
The potential listing comes against the backdrop of high
volatility in Chinese stocks. Beijing has put an arsenal of
measures to work in the past week to stem the selloff since June,
which has wiped out roughly $2.5 trillion in value from China's
equities market in recent weeks, according to data from
FactSet.
China's stock markets had previously been among the best
performing in the world and hit a seven-year peak in mid-June.
Asian shares, including China, dropped after Greek voters rejected
austerity measure's demanded by creditors for a bailout package.
The MSCI Asia Pacific Index has dropped 2.9% since the beginning of
this month, while China's benchmark Shanghai Composite Index fell
8.6% in July.
Also in the cards for Hong Kong this year are planned listings
by state-owned Chinese firms, including several in the financial
sector. Bankers say they are working on potential listings by China
Merchants Securities Co., a brokerage, and China Huarong Asset
Management Co., a company set up to handle banks' bad debts.
Rick Carew contributed to this article.
Write to Yvonne Lee at yvonne.lee@wsj.com
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