HONG KONG - State-owned China Galaxy Securities Co Ltd priced its initial public offering at the lower end of the indicative price range, raising US$1.1 billion (S$1.3 billion), a source with direct knowledge of the matter said on Wednesday.
In Hong Kong's largest IPO in almost six months, China's seventh-largest brokerage sold 1.57 billion shares at HK$5.30 each, said the source, who was not authorised to speak publicly on the matter.
The company launched the deal on May 6, with an indicative range of HK$4.99 to HK$6.77 per share. On Tuesday it narrowed the range to HK$5.28-5.43 per share.
China Galaxy Securities offered 1.5 billion new shares in a primary offering, while its controlling shareholder, Galaxy Financial Holdings, sold 67.7 million existing shares.
The offering was the largest in Hong Kong since People's Insurance Company (Group) of China went public in late November with a US$3.6 billion IPO. It will be surpassed on Thursday, when Sinopec Engineering (Group) Co Ltd prices its up to US$2.2 billion IPO.
The company secured commitments for US$360 million worth of shares from seven investors including Malaysia's sovereign wealth fund Khazanah Nasional, insurers AIA Group and Sino Life Insurance, and a unit of Sinopec Group.
China Galaxy said it will use most of the IPO proceeds to expand its margin financing and securities lending business, with a portion also of the funds also going towards growing the securities trading business.
ABC International, China Galaxy International, Goldman Sachs , JPMorgan and Nomura were hired as joint global coordinators of the IPO, with another 16 banks also acting as joint bookrunners.
The record number of underwriters is a sign of lean times for Asia's once booming stock issuance industry.
The banks stand to earn as much as US$33 million in fees for managing the IPO, equivalent to a 2 per cent underwriting commission and a 1 per cent incentive fee paid to certain underwriters, according to the IPO prospectus.